British Land and Sainsbury's form £1.2bn jv

British Land, the UK real estate investment trust (REIT), and retailer J Sainsbury have created a 50-50 property partnership incorporating 39 superstores across the UK with a valuation of £1.2 bn (EUR 1.5 bn). The superstores subject to the partnership agreement are currently owned by British Land and leased to Sainsbury's for 20 years.

The joint venture will have an initial life of ten years, with an option to extend, while British Life will actively manage and administer the joint venture properties. British land said the joint venture value of £ 1.2 bn represents a net equivalent yield of 5.1% while the consolidated net asset value of the new JV company is £ 544 mln, including British Land’s existing £722mln of outstanding securitised third-party debt. That debt will be retained by the joint venture.

Sainsbury's said it is investing £273 mln in the venture, which owns 38 Sainsbury’s stores with a total net selling area of 1,359,00 sq ft (126,255 m2) and one Waitrose store. The average store size is 73,000 sq ft, with a rental income of £61 mln.

Both parties said the agreement will allow to significantly development the stores in the JV, thereby increasing capital value. In particular, British Land and Sainsbury's plan to extend up to 25 sites by an estimated 500,000 sq ft of net selling area. Sainsbury's said it would benefit from both the enhanced trading performance of these stores while retaining a share in their increased property value.