Innovative property deal provides leading grocer with war chest for store improvements
Tesco has raised£366 million from a sale and leaseback of 14 of its UK properties in a joint venture set up with property company Consensus.
The 12 stores and two distribution centres - accounting for 1.5 per cent of Tesco's UK floorspace - have been transferred to the company, with Tesco agreeing to lease them back for a term of 27 years at a rent reflecting a 5.2 per cent initial yield.
The grocer has hedged its risk of future rent rises by agreeing index-linked rent reviews with a maximum uplift of 3.5 per cent and a minimum of 1 per cent. Tesco finance director Andrew Higginson said: 'This latest joint venture allows us to release funds efficiently from our valuable property portfolio and at the same time remain free to improve the stores for our customers by extending or remodelling them.'
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