UK - UK supermarket giant Sainsbury's has entered into a joint venture with property firm Land Securities, aimed at active management of its property portfolio.
Under the 50—50 Harvest Partnership, Sainsbury's will contribute two freehold properties, with Land Securities contributing a single asset, leased to the retailer, giving a combined value of invested properties of £113.4m (€159m).
The contract's seven-year life reflects the development cycle of the three properties. However, the partners plan to inject further assets, including those acquired for the purpose.
"Others will go in, including new ones," said Gillian Taylor, a spokeswoman for the retailer.
Of the retailer's existing £8.6bn portfolio, 63% of properties are currently freehold, the balance being on leasehold.
"We have plenty of development opportunities," said Taylor. "We're good at developing supermarkets but we needed expertise for other developments, including mixed use," she said. "We're looking at the development potential. They clearly have it."
This latest venture follows the retailer's strategic decision in May actively to maximise the value of its property portfolio. "We've been working on it for a couple of months. Now we're in a position to do it," she said. "Maximising opportunities in our own portfolio is an ongoing project."
Interim results posted last week showed Sainsbury's breaking even on property thanks to the sale of some of its real estate assets, compared with £1m profit in financial year 2006—2007.
In a statement, Sainsbury's said the company's store estate was "fundamental" to its 2010 growth targets, which include 10% space growth via extensions and new stores.
"The company believes that ownership of its property assets enables it to retain operational flexibility while exploiting potential development opportunities and maximising value for shareholders," said its chairman.
Since 2003, the firm has invested £500m in developing its stores, including by acquiring the freeholds of five of its stores and agreeing to acquire another four.
Sainsbury opted for the property securitisation of its £6.8bn portfolio, despite regular pressure over the last year to sell its assets, in part to help finance new cash injections to the pension fund earlier this year.
In a separate development, the UK competition regulator last month indicated it may force supermarkets to sell landbanks it claims supermarkets had amassed to squeeze out competition but then done nothing with.
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