Real Estate

British Land sells £429m of Sainsbury’s superstores


British Land has sold £429m of J Sainsbury superstores as it shrinks its retail property portfolio amid turmoil in the sector.

The company, one of the UK’s largest listed property groups, said on Tuesday it had sold the stores — which were part of a joint venture with Sainsbury’s — to Realty Income Corporation, a New York-listed group.

Because British Land owned only a partial holding in the stores, its own share of the proceeds will amount to £193.5m, which it said was a “modest premium” to book value.

Supermarkets have been less affected than other parts of the retail sector by a crisis resulting from the transition to online, higher costs for retailers, and other factors.

But British Land is seeking to reduce its overall retail exposure in favour of other types of real estate, notably rented homes. It wants retail to make up 30 to 35 per cent of its holdings, down from about half today.

The landlord said it had sold almost £1bn of retail property assets — with the company’s own share of these amounting to £646m — since April 2018 on terms “marginally ahead of book value”.

Superstores will make up 1.8 per cent of British Land’s portfolio once the latest deal completes, the company said.

British Land is currently trading at a discount of 35 per cent to the book value of its assets, according to analysts at Stifel — in line with the broader property sector as investors worry over Brexit and retail.

John Cahill of Stifel praised the company’s “proactive reduction in retail exposure” but noted: “On an absolute basis we think retail will likely remain a drag on the share price.”



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