Tesco buys back own Shrewsbury supermarket in £53m deal
Tesco has bought back its Shrewsbury megastore in a massive deal reportedly worth £53.75 million.
The supermarket giant has also excercised an option to buy back its Ludlow branch from Legal & General Property, which it sold alongside others in Quinton in Birmingham and Market Deeping in Lincolnshire in 2011.
The supermarket chain had offloaded a number of properties and started leasing them back around the turn of the decade, but incoming chief executive Dave Lewis changed the strategy in 2014.
Now it has bought back its branch in Shrewsbury – a massive superstore at Battlefield in the north of the town – and another in Burgess Hill in West Sussex, as well as exercising the buyback options on the other three.
The purchases are in line with Tesco's new property strategy of increasing its number of freehold stores and reducing its exposure to inflation-led rent increases.
In a brief statement, Tesco spokesman Alec Brown said: "The transactions form part of the action we are taking to optimise the freehold/leasehold mix of our property portfolio."
The company has not revealed the prices of the acquisitions, but according to reports it paid £53.75 million for Shrewsbury, £70m for Burgess Hill, and more than the £46.6m it had originally received for the other three.
Since the change of strategy, Tesco has increased its ownership through a number of deals, including a £733m property swap with British Land last year which returned 21 stores to its own possession.
The percentage of owned stores in the supermarket chain's estate rose from 49 to 54 per cent over the course of the financial year to the end of March.
Shore Capital retail analyst Clive Black said: "In a low-margin, mass-market business like food retail, owning properties is a virtue, not a vice."
Inflation is expected to return next year, and that could lead to an increase in the price of rent.
However, Tesco's ability to conclude more deals could be limited by a potential lack of willing sellers.
The company has made big changes to its financial strategy since Mr Lewis replaced Philip Clarke at the helm.
