Tesco and British Land have come to an agreement whereby each will swap its share in a portfolio, leading to benefits for both companies.
Tesco has gained British Land’s 50% share of the Aqua portfolio in return for Tesco’s 50% share in two portfolios. A balancing payment from British Land will also be made to the supermarket giant, reflecting the difference in value and amount of liabilities of the assets being swapped.
The share acquired by Tesco includes 21 stand-alone food stores, which had been part of a joint venture between the two companies, and which are valued at £352m while British Land’s acquisition includes three shopping centres, in Leicester, Peterborough and Londonderry, as well as retail parks where Tesco is currently the main tenant, in Milton Keynes, York and Bury.
The deal reflects the relationship between the two companies, and has advantages for each. Tesco hopes to avoid the rent increases that come with leasehold property in its purchase of British Land’s freeholds, and British Land will boost and spread the risk of its portfolio with multi-let assets.
As part of its retail overhaul, Tesco is closing 43 stores, and pulling out of a number of planned developments.
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