Tesco is to increase the amount it will include in future joint venture and funds due to the book value of its property increasing by 65%.
Announced today as part of its results, it said the net book value of its fixed assets – mostly freehold stores - is £17bn but the market value was around £26bn.
It said: ‘We estimate current market value to be around 65% higher than this. Given the store of value embedded in our property and the strength of our covenant we have decided to divest more freehold property assets than the £5bn we announced last April.’
Last April it announced it would release cash from property through a sequence of joint ventures and other transactions.
Its first deal was a joint venture with British Airways Pension Fund and was followed by a larger joint venture transaction with British Land.
The two deals realised £1.01bn in net proceeds.
The news came as Tesco reported pre tax profits of £2.65bn for the year to 24 February.
Its non food stores Tesco Homeplus trial has been ‘pleasing’ and it said ‘a further large store is planned but no decisions have yet been taken on further expansion for this format.’
It currently has six Homeplus stores of around 50,000 sq ft (4,645 sq m).
