Supermarket Income invests €221m in Sainsbury’s portfolio

Supermarket Income REIT has raised its stake in a portfolio of 26 Sainsbury’s supermarkets in the UK to 51% after buying an additional 25.5% interest from British Airways Pension Trustees Limited (BAPTL).

The £196 mln (€221 mln) deal was financed by JPMorgan Chase Bank.

The remaining 49.0% beneficial interest in the portfolio is held by Sainsbury's, which last year decided to exercise its buy option on the portfolio and is scheduled to take over the assets later this year.

In fact, 21 of the properties are planned to be acquired by Sainsbury’s for £1 bn in two tranches in March 2023 and July 2023. Sainsbury’s 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 10. The one store that has not been regeared will be sold at vacant possession value.

Supermarket Income REIT formed a 50:50 joint venture with BAPTL in May 2020 to acquire a 25.5% stake in the portfolio from British Land.

Subsequently, in February 2021 the JV acquired a further 25.5% stake in this portfolio from Aviva for £115 mln, excluding acquisition costs.

The portfolio was created in 2000 through two sale and leaseback transactions which were funded by bonds issued under two securitisations, Highbury Finance B.V. and Dragon Finance. Highbury and Dragon comprise 16 and 10 Sainsbury's supermarkets respectively.


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