Proactive Investors - J Sainsbury PLC has bought Supermarket Income REIT PLC's 51% interest in the Highbury and Dragon investment vehicle, which holds the freehold to 26 stores, for £430.9mln.
The deal will result in Sainsbury's acquiring the freehold of 21 stores in the Highbury and Dragon investment vehicles which will continue to be operated as Sainsbury's supermarkets with the remaining five stores to be sold. Sainsbury's has held a 49% interest in Highbury and Dragon since it was created in 2000.
The deal will be settled in three tranches - £279.3mln will be paid on 17 March 2023 and £116.9mln will be paid on 10 July 2023. The third tranche of £34.7mln is conditional on the sale of the remaining five stores by Sainsbury's.
Additionally, Sainsbury's will fully fund the Highbury and Dragon bond redemptions of £170.5mln on 20 March 2023 and £130.4mln on 13 July 2023, respectively.
The payments will be funded by utilising the group's cash resources and also by drawing under a committed unsecured term facility.
Sainsbury said the assets acquired generated aggregate profits before tax of £110.4mln in their most recent respective financial years.
The food retailer said it has entered into new 15-year leases on four of these stores with five yearly open market rent reviews and a tenant break option at year ten.