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UK's Sainsbury's In Talks To Sell Stores Worth £500m

By Donna Ahern
UK's Sainsbury's In Talks To Sell Stores Worth £500m

British supermarket group Sainsbury's is in talks to sell 18 stores in southern England to property investor LXi REIT for about £500 million ($568 million).

Both companies said on Wednesday they were discussing a sale and leaseback deal.

LXi REIT said it would seek to fund the deal through a mix of new equity and debt. It said it would discuss with potential investors the possibility of an equity raising.

Price Agreement Reached 

Sainsbury's, Britain's second largest grocer after Tesco, also noted that it had reached an agreement on the price it will pay to buy 21 stores from the Highbury and Dragon investment vehicles.

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It did not disclose the price, but said the deal would complete in the first half of its fiscal year to March 2024.

If the LXi REIT transaction goes ahead, the cash from that would part-fund the Highbury and Dragon deal, Sainsbury's said.

Both Deals 

Both deals would result in a broadly unchanged proportion of leasehold and freehold Sainsbury's supermarkets, but with ownership and lease structures better reflecting current market conditions and the group's priorities, it added.

Shares in Sainsbury's were up 1.8% at 0922 GMT, while shares in LXi REIT were up 2.6%.

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Pay Increases 

On the 14 September, Sainsbury's announced that it would raise pay for its workers again as it looks to attract and retain staff in a tight labour market.

Sainsbury's said the rise, the first ever outside of the annual pay review, would help its staff get through the cost of living crisis.

News by Reuters, edited by Donna Ahern, Checkout. For more retail stories, click here. Click subscribe to sign up for the Checkout print edition.

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