In exchange, British Land will take over Tesco's stake in three shopping centres, three retail parks and three standalone stores. These are currently held as a joint venture between the two companies.
Tesco will also receive £96m from British Land as part of the agreement. Dave Lewis, chief executive of the supermarket, said the transaction “allows us to increase our ownership and thereby insulate more of our businesses from indexed rent reviews”.
“We have a long way to go but it's a transaction which takes us in the right direction. This agreement makes our business simpler and stronger,” he continued.
From British Land's point of view, the exchange reduces its foodstore weighting and increases exposure to multi-let retail parks and shopping centres, giving it the opportunity to add value through asset management and development.
Charles Maudsley, chief executive of the property investment company, said:
This mutually beneficial transaction clearly demonstrates the great relationship we enjoy with Tesco. It plays to our strengths of managing multi-let assets and gives Tesco more control of their stand-alone portfolio. We see significant opportunity to add value and drive returns through asset management and development.