The British Land Company PLC and Tesco plc have formed a new £650-million (ca. €886m) Joint Venture. The limited partnership incorporates 21 Superstores across the UK, all occupied by Tesco. It brings the number of joint ventures between the two companies to four. The new joint venture has a 20-year term with an early termination option in 2017.
The portfolio has an initial rent of £29 million pa secured against 21 high quality food stores. The rents are subject to annual RPI indexed increases for the first 20 years capped at 3.5% pa, with open market reviews in year 20 and options at that date for Tesco to either renew or buy back the stores at open market value.
The occupational leases have been structured to provide operational flexibility, in keeping with Tesco's strategy of continued investment, refreshment and growth of its store portfolio. This customer focused approach also reflects British Land's retail investment strategy.
Robert Bowden, British Land's Investment Director, said: "We are very pleased to conclude this transaction with Tesco, increasing our investment in one of our favoured retail sectors where we see significant growth potential. The acquisition also adds to our portfolio of investments with indexed or minimum rent increases, now amounting to over £2 billion."
Colliers CRE advised British Land on the purchase and Tesco were advised by Morgan Williams.
Tesco and British Land have three other property joint ventures, the first of which was formed in 1996. Assets in the joint ventures total £1.16 billion as at December 2006. The joint ventures include: 4 Retail Parks, 3 Shopping Centres and 13 Tesco stores.
Source: British Land