British Land to sell its 12 Sainsbury’s stores for £429m

British Land has announced the sale of 12 superstores from its joint venture with Sainsbury’s to the Realty Income Corporation for a price of £429m.

The company said its share of the proceeds totals £193.5m representing a “modest premium” to September 2018 book value.

The move is the latest example of how British Land is delivering its long-term strategy to build an “increasingly mixed-use business” resulting in retail to comprise of only c.30-35% of the assets of its business, down from its current total of 50%.

In a statement announcing the sale, British Land said: “Alongside investment into our campuses and progressing unique development opportunities such as Canada Water, we are focused on further sales of retail assets which are not aligned to our strategy and continue to make good progress. 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.

“As a result, we have exchanged or completed on nearly £1bn of retail assets sales (£646m our share) since April 2018 at an average yield of 5.7% on terms marginally ahead of book value. This activity has included the sale of Debenham’s Clapham and the Spirit pubs portfolio.”

Once the transaction is completed, which is expected at the end of May, British Land’s superstore exposure will fall to 1.3% of its portfolio based on September 2018 valuations with six standalone stores remaining. It also added net proceeds are expected to be c.£95m following the repayment of debt and associated break costs.