Supermarket Income REIT has bought out British Airways Pension Trustees’ share of its Sainsbury’s joint venture for £196m.
The REIT has acquired the pension fund’s 25.5% beneficial interest in the Sainsbury’s Reversion Portfolio, increasing its holding to 51%. The remaining 49% beneficial interest in the portfolio is held by Sainsbury’s.
The portfolio comprises the freeholds to 26 Sainsbury’s supermarkets, of which 21 properties will be acquired by Sainsbury’s for just over £1bn in two tranches in March 2023 and July 2023. As a result of this deal, Supermarket Income will receive a minimum of £380m in cash.
Beneficial ownership of the five remaining stores is held between the REIT and Sainsbury’s in the same proportions as the beneficial interests.
Sainsbury’s has entered into new 15-year leases on four of the stores with five-yearly open-market rent reviews and a tenant break option at year 10. It is expected that the one store that has not been regeared will be sold at vacant possession value.
The REIT formed the 50:50 jv with British Airways Pension Trustees in May 2020 to buy British Land’s 25.5% stake in the SRP for £102m. In February 2021, the jv acquired a further 25.5% stake from Aviva for £115m.
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