LONDON - Tesco has agreed a second sale and leaseback of properties with the Tesco Pension Fund Trustees in an effort to release value from its property portfolio.
It has sold 41 stores for a total consideration of more than £950m, with an average net initial yield of 4.9%.
The transaction is primarily financed by fixed rate notes issued by Tesco Property Finance 3, and is structured as a 50-50 joint venture with the Tesco pension scheme trustees.
This is the second venture completed with its own pension scheme, but the supermarket has also completed three property deals with other UK pension funds, such as BP, over the last two years. (See earlier IPE articles: Tesco continues property deals with pension funds and Tesco fund gets £500m property as deficit exceeds £1bn)
Tesco noted the proceeds would not be going toward the pension fund, but instead be used to fund new property development projects in the UK and international markets.