Sainsbury(J) PLC Acquisition of interest in investment vehicles (8788S)
14 Marzo 2023 - 8:00AM
UK Regulatory
TIDMSBRY
RNS Number : 8788S
Sainsbury(J) PLC
14 March 2023
14 March 2023
Acquisition of interest in Highbury and Dragon investment
vehicles
On 21 September 2022, J Sainsbury plc ("Sainsbury's") announced
that it had reached agreement on an acquisition price for stores
held in the Highbury and Dragon investment vehicles. Sainsbury's
has held a c.49% interest in Highbury and Dragon since it was
created in 2000. The vehicles comprise the freeholds of 26
Sainsbury's supermarkets which are leased to Sainsbury's. The
remaining c.51% is owned by Supermarket Income REIT.
Today, Sainsbury's announces the exchange of contracts for the
purchase of Supermarket Income REIT's c.51% interest in the
Highbury and Dragon investment vehicles. The purchase will be
implemented through an acquisition of Cornerford Limited, Horndrift
Limited, Avenell Property PLC and Hobart Property PLC (the
"Transaction").
The Transaction will result in Sainsbury's acquiring the
freehold of 21 stores in the Highbury and Dragon investment
vehicles which will continue to be operated as Sainsbury's
supermarkets. The remaining five stores will be sold by
Sainsbury's. Sainsbury's has entered into new 15-year leases on
four of these stores with five yearly open market rent reviews and
a tenant break option at year ten. Following completion of the
transaction, Supermarket Income REIT has the benefit of an option
to acquire the four stores which are subject to the new Sainsbury's
leases for a net consideration of GBP33.2 million (net of SUPR's
existing interest and excluding acquisition costs). It is expected
that the one remaining store will be sold at vacant possession
value.
The Transaction is expected to complete on 17 March 2023 for a
total consideration of GBP430.9 million (excluding costs) which
will be paid in three tranches. GBP279.3 million will be paid on 17
March 2023 and GBP116.9 million will be paid on 10 July 2023. The
third tranche of GBP34.7 million is conditional on the sale of the
remaining five stores by Sainsbury's. Additionally, Sainsbury's
will fully fund the Highbury and Dragon bond redemptions of
GBP170.5 million on 20 March 2023 and GBP130.4 million on 13 July
2023 respectively. The total consideration and Highbury and Dragon
bond redemptions will be funded by utilising the Group's cash
resources and also by drawing under a committed unsecured term
facility.
The gross assets acquired as part of the Transaction total
GBP431.5 million. The entities acquired in the Transaction
generated aggregate profits before tax of GBP110.4 million in their
most recent respective financial years. These profits, in part,
reflected revaluation gains recognised on the investment properties
held in the Highbury and Dragon investment vehicles. Going forward,
Sainsbury's will not recognise revaluation gains and losses on
these assets as they will be held as owner operated freehold
stores, instead seeing a reduction in depreciation and interest
expenses, alongside a reduced cash outflow on rent.
Contacts:
Investor Relations: James Collins +44 (0) 20 7695 0080
Media: Rebecca Reilly +44 (0) 20 7695 7295
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END
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