26th Mar 2008 07:01
Sainsbury(J) PLC26 March 2008 26 March 2008 Sainsbury's forms £1.2 billion property joint venture with British Land • £273 million investment to create a 50:50 Joint Venture with British Land (1) • Securitised Joint Venture owns 39 retail sites with a value of £1.2 billion (2) • Transaction unlocks significant development potential and value creation Sainsbury's today announces an investment of £273 million to create a 50:50Joint Venture ('JV') with British Land (1). This securitised property JV holds39 stores, including many of Sainsbury's most important stores (2), with avaluation of £1.2 billion, representing a net equivalent yield of 5.1 per cent.British Land's existing £722 million of outstanding securitised third partydebt, at a fixed interest rate of 4.96 per cent and average life of 12 years,will be retained by the joint venture (3). Creation of this JV unlocks the opportunity to significantly develop thesestores and deliver an improved customer offer. The JV will seek to maximise thefull potential of these development opportunities, including extending up to 25sites by an estimated 500,000 sq. ft. of net selling area (4). Sainsbury's willbenefit from both the enhanced trading performance of the extensions as well asretaining a share of the increased property value. This transaction is in line with Sainsbury's active property management strategyof increasing its control over key trading assets with significant developmentpotential whilst disposing of fully developed mature assets. The initial termof the joint venture is 10 years and after this term Sainsbury's retains anequal degree of control over the ongoing ownership of the properties. The investment will initially be funded from cash and existing facilitiesavailable to Sainsbury's. Over the medium term the transaction will be fundedby the continuing sale of Sainsbury's mature assets. The transaction will beearnings neutral in the current financial year (5) and the additional tradingand property value will be accretive to earnings in future years. Justin King, chief executive, said: "This venture is an excellent opportunityfor Sainsbury's to increase our interest in the future extension and developmentof many of our most important stores. This will enable us to enhance thecustomer offer, increasing both the trading and property value of these assets.This transaction sits within Sainsbury's strategy to actively develop theproperty estate and we are delighted to be working alongside British Land todeliver these development opportunities." Enquiries: Investor Relations Media Elliot Jordan Pip Wood +44 (0) 20 7695 4931 +44 (0) 20 7695 6127 Notes (1) Total investment of £273 million including transaction costs and fees.The JV has an initial life of 10 years and the net asset value for the JV is£544 million. (2) The JV owns 38 Sainsbury's stores and one Waitrose store. The total netselling area of the 38 Sainsbury's stores is 1,359,000 sq. ft., accounting for8.1 per cent of total supermarket estate as at 6 October 2007. (3) The JV is securitised with long-term debt fixed at 4.96 per cent. Debtrepayment is fully amortised by 2025. (4) Subject to planning consent and regulations. (5) The JV is earnings neutral for J Sainsbury plc in the 2008/09 financialyear, as the cost of interest in relation to the investment is offset by itsshare of the JV rental income. (6) The creation of this JV will be disclosed as a non-adjusting post balancesheet in the J Sainsbury plc financial statements for the 52 weeks ended 22March 2008. The Joint Venture will be equity accounted from 25 March 2008. (7) This JV is the second significant Sainsbury's property JV. The HarvestJV with Land Securities was established in November 2007. (8) As at 24 March 2007, Sainsbury's owned 286 freehold and long leaseholdsupermarkets, representing 62% of the supermarket estate net selling area. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Sainsbury'sBritish Land