15th Mar 2005 08:06
Tesco PLC15 March 2005 TESCO ANNOUNCES NEW PROPERTY JOINT VENTURE Tesco today announced a new property joint venture to realise £366 million fromits UK property portfolio. Joining forces with property group Consensus, Tesco has created an innovativepartnership that allows us to maintain a balance between the capital intensityof holding a substantial, growing freehold portfolio and an element of leaseholdwhilst providing the flexibility to release funds for programmed investment inour existing business. The 50/50 joint venture follows an earlier deal announced in March 2004.Together these initiatives provide further flexibility and firepower to expandand take full advantage of the growth opportunities available in all areas ofTesco's business. Announcing the deal Tesco Finance Director, Andrew Higginson said: "We aredelighted to be joining forces with Consensus. This latest joint venture allowsus to release funds efficiently from our valuable property portfolio and at thesame time remain free to improve the stores for our customers by extending orremodelling them." The joint venture takes advantage of the attractive levels within the debt andequity markets and has achieved a highly competitive price reflecting aneffective initial yield of circa 5.2% p.a. The keen pricing was achieved througha competitive two-stage debt and equity bid process run for Tesco by KPMGCorporate Finance. The sole debt provider was Deutsche Bank AG London. The transaction will include 12 Tesco stores and two distribution centres,accounting for around 1.5% of Tesco property assets by gross floor area. Thejoint venture is for a term of 27 years with an early termination option in2015. The transaction also links the annual rental uplifts to a Limited PricesIndex calculated by reference to RPI collared between 1% and 3.5% per annum,thereby hedging part of Tesco's fixed costs against its underlying businessrevenue. ENDS For further information: Tesco plc: Lucy Neville-Rolfe Tel: 01992 646606Steve Webb Tel: 01992 644800Jonathan Church Tel: 01992 644645 To contact the duty press officer out of hours please telephone 01992 644733(option two from voicemail). KPMG: Michael Lindsay Tel: 020 7311 4205Revathi Padmakumar Tel: 020 7311 8229Kate Ryder Tel: 020 7311 8807 Consensus Business GroupVincent Tchenguiz Tel:020 7550 3822Paul Taylor Tel:020 7550 3899Derek Gordon Tel:020 7863 8905 Notes for editors: 1. Tesco has entered into a number of 50/50 property joint ventures in the UK prior to this transaction: • BLT Properties Ltd with British Land, owning 10 properties. • Tesco British Land Property Partnership with British Land, owning 2 - properties. • Tesco BL Holdings Ltd, with British Land, owning 9 properties. • Shopping Centres Ltd, with Slough Estates, owning 2 properties • Tesco Property Limited Partnership with Topland owning 35 properties 2. Consensus has entered into property joint ventures in the UK prior to this transaction, including: • Consensus with Hilton Hotel Group and Halifax Bank of Scotland owning 10 hotels. 3. Consensus Business Group is a major investor in the UK real estate market having invested in excess of £1bn over the last 12 months. Consensus is ultimately controlled by the Tchenguiz Family Trust which includes the Rotch Property Group. Rotch Property Group has in excess of £4bn of real estate. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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