British Land offloads Sainsbury’s superstores for £429m to cut retail exposure
British Land has sold a swathe of Sainsbury’s superstores for £429m as it ploughs ahead with a plan to reduce its exposure to retail property.
Read more: British Land swings to £42m loss as retail market hits portfolio value
The FTSE 100 landlord revealed this morning that it is selling 12 superstores from its joint venture with Sainsbury’s to Realty Income Corporation, a US-based real estate investment trust.
The deal represents a net initial yield of five per cent.
British Land's share of the proceeds will be £193.5m, "representing a modest premium to September 2018 book value", the group said.
"We have a clear view of the value of our assets and despite the clear challenges currently in the retail market, we remain opportunistic and proactive," it added.
Why it's interesting
The move marks the latest development in British Land’s strategy towards owning a mixed-use business comprising London office and campus areas, a smaller, refocused retail estate and a residential holding of mainly build-to-rent properties.
Under the decade-long leadership of chief executive Chris Grigg, British Land has looked to shed its share in the embattled retail sector and create a more balanced portfolio, setting itself a target of reducing retail property to account for 30-35 per cent of the business, down from around half today.
In the last 12 months the group has offloaded nearly £1bn worth of retail property, including the sale of Debenham’s in Clapham and the Spirit pubs portfolio.
Today's deal also comes as Sainsbury's and Asda hope to push through a merger deal to protect their market share in an increasingly competitive environment.
Last month the two retailers pledged to sell between 125 and 150 supermarkets and a number of convenience stores in a bid to push through a £12bn merger.
Read more: Asda and Sainsbury's propose selling 150 stores to save merger
In February hopes of a tie-up were dealt a blow by the competition watchdog, which said that it could block the deal over "extensive competition concerns".