Supermarket chain offloads 13 branches of 1800 in the UK

Published on Friday 22 August 2008 10:59

SUPERMARKET chain Tesco has announced it is selling 13 of its 1800 UK stores to help fund its international expansion.

The group revealed sale deals with four separate purchasers, involving 605 million of property assets.

The stores, including a distribution centre, amount to approximately 2.4 per cent of the company's UK portfolio and have been bought by the Universities Superannuation Scheme, PRUPIM, LaSalle Investment Management and Canada Life.

Tesco today said all the sold properties – with a total floor space in excess of 1.7 million sq ft – have been leased back to the company on RPI linked terms. It means it will still operate from the sites. The lowest yield achieved on the stores was 4.88 per cent.

Selling the stores is the latest phase of Tesco's ongoing programme to release value from its UK property portfolio.

It is hoped the company will release 5 billion over five years, allowing it to invest in projects across the world in a bid to become an internationally-recognised powerhouse.

The firm has announced this month that is investing 60m in India by opening a chain of cash and carry stores, to sell fresh food, grocery and non-food products to small retailers, restaurants and kirana stores while providing farmers with a route from its base in Mumbai.

Chief executive Sir Terry Leahy had said it was "another exciting development" for Tesco in accessing another of the world's most important economies.

Prior to this, in May, 1bn was spent to acquire 36 hypermarkets in South Korea, adding to Tesco's Homeplus chain. It was the group's biggest ever acquisition and put them almost equal with the country's market leader Shinsegae.

Tesco also entered the US in October 2007, spending hundreds of millions of pounds on its Fresh & Easy convenience stores.

The chain already operates across Europe and has 814 stores across Asia, in China, Japan, Malaysia, South Korea and Thailand.

Tesco continues to be a forerunner in UK supermarket shopping owning around 30 per cent of the grocery market.

In April, it announced ringing up an average of 98,554 a minute through its tills over the last financial year.

UK-based investment includes a project to build a full-service retail bank, after buying the 50 per cent stake in Tesco Personal Finance owned by The Royal Bank of Scotland, for 950m.

Tesco also now owns the Lasswade-based chain of Dobbies Garden Centres.

Stores sold in the acquisition programme were Tesco Extra hypermarkets in Borehamwood, Aylesbury, Chichester, Bletchley and Northallerton as well as superstores in Hayes, Sevenoaks, Oxford, Bury St Edmunds, Brixton, Crewe, Northallerton, Yeading and Worcester.