Tesco has agreed a £445m sale and leaseback for 16 of its stores nationwide with the British Airways Pension Fund

The two today announced the 50:50 joint venture, which will realise £445m for Tesco from its UK property portfolio.

The 16 stores represent 2% of Tesco’s UK property assets by gross floor area. The deal reflects an initial yield of less than 4.5%.

The joint venture is for a term of 20 years with an early termination option in 2016. Annual rental uplifts have been agreed - linked to a RPI-based limited prices index - of between zero and 3.5% a year.

The joint venture follows Tesco's announcement in April 2006 of a property sale and leaseback programme that is expected to realise up to £5bn over five years from its freehold estate.

The retailer said the joint venture takes advantage of attractive conditions within the debt and equity markets.

The sole debt provider was Deutsche Bank.