LONDON-British Land has completed a euro 76-million ($98.3-million) deal with retailer Sainsbury's. Under the terms of the deal, the developer will acquire six Homebase stores and take back the lease on a supermarket at Meadowhall shopping center. A 93,000-sf food superstore was also part of the deal.

The stores are located in Birkenhead, Derby, Ipswich, Rayleigh Weir and Tunbridge Wells, and total 181,000 sf. All of the Homebase units share the same sites as existing Sainsbury's food stores and have open retail planning consents.

All of the stores are leased to Homebase with an average of 12 years still to run on the lease and produce a current income of euro 19 ($24.6) per sf average. The purchase will show an initial return of 4.22%.

At the same time, British Land also acquired a 93,000-sf food superstore from Sainsbury's on an 11-acre site in Crawley. The lease is guaranteed by J Sainsbury Plc for a new term of 30 years with five yearly upward-only rent reviews at a starting rent of £1.9 million euro ($3.6 million) a year based on a store rent of euro 28.4 ($36.8) per foot.

The site also contains a 43,500-sf Homebase, car wash, petrol-filling station and drive-thru McDonalds. The initial payment of £47.4 million ($89.6 million) reflects an initial yield of 5.25% and will be subject to a further top-up capital payment on the settlement of the Homebase rent review due in December 2005.

In a third connected transaction British Land has contracted to purchase back the Sainsbury's lease of the 100,000-sf food store at Meadowhall. As part of the deal, British Land has agreed to sell the Sainsbury's store at Selly Oak back to Sainsbury's, to facilitate the regeneration of the Selly Oak area. British Land was advised by Colliers CRE and Smith Young and Sainsbury by Gilbert Bath and Angermann Goddard & Lloyd.