British Land PLC (LON:BLND) is expected to receive net proceeds of around £95mln after the sale of 12 superstores from its joint venture with J Sainsbury PLC (LON:SBRY) on which it has exchanged contracts for £429mln, as it continues to reduce its exposure to retail businesses.
The FTSE 100-listed real estate group said its share of the proceeds of the planned disposal to Realty Income Corporation will be £193.5mln, representing a modest premium to September 2018 book value and a net initial yield of 5.0% from the joint venture.
The group said the move is part of its long term strategy to reduce its Retail exposure to comprise around 30-35% of its business assets, down from around 50% currently.
It added that, once the transaction completes - which is expected at the end of May – retail superstores exposure will fall to 1.3% of its portfolio, based on September 2018 valuations, with six standalone stores remaining.
British Land said its long-term strategy is to build an increasingly mixed-use business focused on three core elements: campus-focused London offices; a smaller, refocused Retail business and Residential, principally build-to-rent.
As a result, it pointed out, it has exchanged or completed on nearly £1bn of retail assets sales - £646m being the group’s share - since April 2018 at an average yield of 5.7% on terms marginally ahead of book value.
The group concluded: “We have a clear view of the value of our assets and despite the clear challenges currently in the retail market, we remain opportunistic and proactive.”