Land Securities and Sainsburys form property JV

Land Securities has formed a 50-50 partnership with Sainsbury's to 'unlock development value' at the British supermarket group's stores. The joint venture, known as Harvest Limited Partnership, will initially involve three stores in Britain with an aggregate value of £113 mln (EUR 159 mln) and will run for an initial period of seven years.

The announcement of the joint venture comes little over a week after Qatari-backed fund Delta Two's EUR 16 bn bid to take over Sainsbury's was derailed by Delta's inability to finalise the financial arrangements for the offer.

Land Securities, the largest real estate investment trust (REIT) in the UK, said the joint venture aims to 'maximise the property potential at each site both for the Sainsbury's stores and for the customers visiting for a wider shopping experience'. Land Securities is contributing a Sainsbury supermarket it owns in Hull while the retailer is contributing two freehold stores in Thanet and Wandsworth.

The stores will all be let to Sainsbury's on new 25-year leases and Land Securities will use its property expertise to act as development manager to the joint venture and to provide asset management and administration roles. The agreement also envisages the expansion of the portfolio through the addition of other suitable retail properties and a programme of potential extensions and development opportunities.

Richard Akers, managing director of Retail at Land Securities said: 'This joint venture means we access key development opportunities and gain a partnership with one of the UK's leading retailers. These three sites all have potential for development which we can help unlock through our expertise'.

Separately, Land Securities announced on Wednesday that it plans to split up its business in three separate listed companies: retail, London and outsourcing. Click on the link below for more details.