Sainsbury's Regulatory News (SBRY)

21st September 2022

J Sainsbury plc

Property transactions

Sainsbury's is in discussions with LXi REIT plc to sell 18 supermarket stores to LXi REIT for approximately £500m on a sale and leaseback basis. LXi REIT has announced that it is discussing with investors a possible share issue to part-fund this transaction and that there can be no certainty that the transaction or the associated share issue would take place.

Additionally, we are pleased to announce that we have reached agreement on an acquisition price for the 21 stores in the Highbury and Dragon investment vehicles, on which Sainsbury's served notice to purchase last year and earlier this year. The acquisitions will complete in the first half of the financial year to March 2024.

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 a joint venture between Supermarket Income REIT and British Airways Pension Trustees Limited ("the JV"). This agreement marks a significant step in the process of bringing the structure to an end.

If the LXi transaction were to proceed, the cash received from this transaction would be used to part-fund the purchase of the 21 Highbury and Dragon stores. In combination with some other smaller activities, this would result in a broadly unchanged proportion of leasehold and freehold Sainsbury's supermarkets, with ownership and lease structures better reflecting current market conditions and our priorities. The financial impact has been anticipated in our planning and accordingly would not impact guidance. However, there would be a cash timing effect as we would expect to receive the sales proceeds of the LXi REIT transaction this financial year but will complete the Highbury and Dragon purchases next financial year.

ENDS

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