Land Securities today revealed a joint venture with Sainsbury’s to expand current sites and develop new stores worth an initial £113m.
The 50:50 joint venture will see LandSecs contribute one store that it owns in Hull, and sainsbury’s will contribute two stores it owns in Thanet, Kent and Wandsworth, south London.
Expansion and development
The stores will all be let to Sainsbury’s on new 25 year leases. All have development potential and the aim of the partnership will be to maximise the potential of each site both for the Sainsbury’s store and also creating facilities around the store.
The agreement should also see new stores added to the portfolio, with a programme of potential extensions and development opportunities.
Richard Akers, managing director of retail at Land Securities said: ‘This joint venture means we access key development opportunities and gain a partnership with one of the UK's leading retailers.
‘These three sites all have potential for development which we can help unlock through our expertise.’
Control and flexibility
Peter Baguley, Sainsbury's property director said: ‘This joint venture is part of the active management of our property portfolio outlined in May and gives us access to the specialist development skills of Land Securities.
‘It allows us to maximise the development potential at each site, improving our customer offer and the value of the property, whilst retaining operational control and flexibility.’
In a separate transaction, Land Securities has exchanged contracts to sell two existing stores to Sainsbury's in Winchester and Wednesfield.
In its half-year results, Sainsbury’s reiterated its commitment to retaining the freehold to its property portfolio. It said: ‘The company believes that ownership of its property assets enables it to retain operational flexibility while exploiting potential development opportunities and maximising value for shareholders.’
It also said: ‘The company will consider similar partnerships where there is potential to develop and increase the value of its property portfolio.’
It is thought that the company has come under renewed pressure from Robert Tchenguiz, who owns a stake of around 10% of Sainsbury’s, to split the company into separate operating and property companies.