British supermarket giant Sainsbury’s will pay £430.9 million to take full ownership of the Highbury and Dragon store investment vehicles.
Sainsbury’s has held an around 49% stake in Highbury and Dragon since it was created in 2000 and will now acquire the remaining interest from Supermarket Income REIT.
The vehicles comprise the freeholds of 26 Sainsbury’s supermarkets which are leased to the retail giant.
Under the deal, Sainsbury’s will acquire the freeholds of 21 stores, which will continue to be operated as its supermarkets. The remaining five stores will be sold by Sainsbury’s, four of which it will lease back.
Following the transaction, Supermarket Income REIT has the option to acquire the four stores that are subject to the new Sainsbury’s leases for a net consideration of £33.2 million. It is expected that the one remaining store will be sold at vacant possession value.
Sainsbury’s will fully fund Highbury and Dragon’s bond redemptions of £170.5 million on 20 March and £130.4 million on 13 July. The acquisition and bond redemptions will be funded by cash resources and a committed unsecured term facility.
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