Prupim secures second Tesco portfolio –

Prupim has announced a second Tesco portfolio purchase a day after it was revealed that the UK’s largest supermarket has sold £605m of property to real estate investors. The move is part of a sale-leaseback deal that will fund Tesco's expansion into the competitive Indian wholesale food market.

Just a day after Tesco sold £605 million of property to real estate investors, PRUPIM has secured a second portfolio of Tesco foodstores on behalf of its client fund Prudential Retirement Income for £94.5m. The portfolio is made up of stores in Suffolk, North Yorkshire, and Kent.

Tesco is taking leases back for 20 years with annual rent reviews linked to RPI and options to renew for up to a further 30 years.  Tesco will continue to manage the portfolio. PRUPIM and Tesco have been in discussions on an exclusive basis.

Thursday it was revealed that Tesco has sold a total of £605 million ($1.1 billion; €763 million) of property In four separate sale-leaseback transactions, including 13 stores and a distribution center, to real estate investors, including LaSalle and the real estate arm of insurance company Prudential Financial, Prupim.

The deal was part of Tesco’s “ongoing program” of realizing capital from its substantial property assets, the company said in a statement. The properties sold have a total floor space of more than 1.7 million square feet, just 2.4 percent of its entire property portfolio.

The other purchasers were the Universities Superannuation Scheme, which represents UK university and higher education staff, and Canada Life. Tesco added that the properties were leased back to the firm on RPI-linked leases, the lowest yield being 4.88 percent.

Last week, the world’s fourth largest retailer and Britain’s largest supermarket, announced plans to set up a wholesale operation to supply cash-and-carry goods in India. Tesco said it would supply fresh foods, groceries and on-food products to small retailers, restaurants and kirana stores. It also announced plans to act as a consultant to the Indian Tata Group’s Trent unit as it rolled out hypermarkets in the country.