British Land is frontrunner to buy a collection of seven Homebase stores put up for sale by Sainsbury’s for £74.5m.
The property company, which bought 22 Homebase stores from Sainsbury’s in 2001 for £156m, will pay more than £80m for the 246,000 sq ft portfolio. BL’s offer will reflect an initial yield of around 4.5%.
The seven properties located in Ipswich, Rayleigh Weir, Epsom, Tunbridge Wells, Woking, Derby and Birkenhead provide an annual rental income of £3.8m.
Only two of the stores have leases expiring in the next six years, so it will be some time before British Land can look to attract more lucrative tenants such as Next or Argos.
Prudential, Morley, Scottish Widows, LxB, Insight, German fund manager Oppenheim Immobilien KAG, Next and Homebase itself all bid for the properties. The majority of offers were around £78m.
Paul Wilkinson, director at Wilkinson Williams, said offers had come in at well above the asking price because all the stores had open A1 consent, all had long terms, and were next to Sainsbury’s stores.
“Sainsbury’s is keen for cash at the moment,” said Wilkinson. “If it was Tesco or Asda then they wouldn’t be selling.”
Gilbert Bath is advising Sainsbury’s. Colliers CRE is acting for British Land.
References: EGi News 11/02/05
