Tesco succeeds in 514m sale and leaseback deal

BRITAIN&rsquo;S biggest retailer, Tesco, said yesterday it had carried out a sale and leaseback deal for property assets valued at &pound;514m.<br /><br />The transaction, structured as a 50-50 joint venture with an unnamed UK pension fund, represents the latest phase in the firm&rsquo;s ongoing programme to release value from its property portfolio.<br /><br />The deal involves 15 Tesco stores and two distribution centres, which have a combined gross internal area in excess of 2.7m square feet.<br /><br />The properties will be leased back to the joint venture on 30-year Retail Price Index (RPI) linked leases, with an average initial yield of 5.2 per cent for the stores and 6.3 per cent for the distribution centres.<br /><br />The deal is being funded primarily by fixed rate notes issued by Tesco Property Finance 2 &ndash; the debt issuing entity of the joint venture.<br /><br />Tesco publishes its first-half results today.