UK supermarket real estate investor Supermarket Income REIT has formed a 50:50 joint venture (JV) with British Airways Pension Trustees Limited (BAPTL), acting on behalf of the British Airways Pension Fund, to acquire a 25.5% stake in one of the UK’s largest portfolios of supermarket properties from British Land Plc for £102 million.
The company’s contribution to the JV is £51 million, excluding costs which will be satisfied from its existing cash balances and credit facilities, said Supermarket Income REIT in the statement.
The portfolio consists of 26 Sainsbury’s supermarkets. It is a geographically diverse high quality portfolio of stores with a London and south east bias. It was created through two sale and leaseback transactions by Sainsbury’s in 2000. Following this transaction, the freeholds of the properties are now owned by Sainsbury’s (49%), Aviva (25.5%) and the JV (25.5%).
The portfolio is funded by bonds, which mature in 2023. The rental income received from the portfolio pays down the outstanding balance of the bonds to a final amount which will be repayable in 2023 by way of a refinancing or sale of the portfolio.
“We are very pleased to have formed a strategic long term partnership with British Airways Pension Trustees Limited to facilitate this transaction,” said Nick Hewson, Chairman of Supermarket Income REIT.
“Our investment in this Sainsbury’s property portfolio gives us an interest which we believe will be highly NAV accretive over the next three years. We will work closely with the co-owners, Sainsbury’s and Aviva, to extend the leases and find a solution to the longer term ownership of the properties,” he added.