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Property investor LXi REIT has announced it is pulling out from a deal to buy 18 Sainsbury’s stores in southern England after suspending an equity funding, citing stock market volatility.
LXi had last Wednesday (21 September) said it was in talks with the grocer to buy 18 supermarkets for £500m in a sale and leaseback deal, but the purchase was conditional on the investor raising the necessary equity funding.
The supermarket chain said that if the transaction went through, the proceeds would be used to part-fund the purchase of 21 freehold Sainsbury’s supermarkets from the Highbury and Dragon portfolios.
Sainsbury’s confirmed that the purchase of these 21 stores will complete in the first half of the financial year to March 2024, and that “given the strength of the Sainsbury’s balance sheet and property portfolio”, it has a “wide variety” of alternative options to finance this.
Sainsbury’s were set to reportedly benefit from several defensive characteristics from the initial transaction, including: strong trading performance, very low and sustainable indexed rents, long-term ‘green’ leases, low site coverage and modern buildings that provide omni-channel sales optionality.
Sky News reported that LXi REIT is valued at an estimated £2.5bn and also owns assets that form part of Merlin Entertainment, the group behind the Alton Towers, Legoland and Thorpe Park theme parks.
