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(Alliance News) - J Sainsbury PLC on Tuesday on said it has agreed on a price for the acquisition of Supermarket Income REIT PLC's Sainsbury's Reversion Portfolio, which is held in the Highbury and Dragon investment vehicles.
The London-based supermarket reported that it has exchanged contracts for the purchase of Supermarket Income's 51% interest in Highbury and Dragon for GBP430.9 million.
Sainsbury's has held a 49% interest in the portfolio since its creation in 2000.
Following the purchase, Sainsbury's will acquire a freehold of 21 of the 26 SRP portfolio properties, which will continue to operate as Sainsbury's supermarkets, while the remaining five stores will be sold by Sainsbury's.
The company has entered into 15-year leases on four of the stores, while Supermarket Income retains an option to acquire the four stores under 15-year leases for a consideration of GBP28.3 million.
The transaction, which is expected to be completed on March 17, will be paid in three tranches, with the first, GBP279.3 million, due on March 17.
The second tranche of GBP116.9 million will be paid on July 10, and the third tranche of GBP34.7 million is conditional on the sale of the remaining five stores by Sainsbury's.
Supermarket Income said it will use the proceeds of the sale to reduce its existing debt facilities.
Ben Green, director of Atrato Capital Ltd, the investment adviser to Supermarket Income said: "This investment has been highly accretive for our shareholders and is further evidence of the long-term strength and value of UK grocery property"
Sainsbury's shares rose 0.3% to 255.00 pence each in London on Tuesday after midday, while Supermarket Income REIT shares rose 1.8% to 87.15p each.
By Harvey Dorset, Alliance News reporter
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