Sainsbury''s urged to sell property - commercial mortgages

16 April 2007

Following the collapse of a £10.1 billion private equity takeover for Sainsbury''s calls are being made for the retail group to sell off some of its real estate to make cash funds available to stockholders.

Speaking to the Telegraph property tycoon Robert Tchenguiz recommends that Sainsbury''s sell a proportion of its real estate portfolio, arguing that having £1.6 billion worth of debt in a company worth £10 billion is unfavourable.

A property sell-off could attract a range of buyers looking for prime retail space in the UK, including parties prepared to take out commercial mortgages.

Lord Sainsbury maintains that the group''s property stock is one of the key factors in its success, highlighting a strong balance sheet and predominantly freehold property. As such, he recommends against selling property in order to protect longer term interests.

"Eroding these attributes will make the company more vulnerable to competitive pressures which is not in the best long-term interests of the company, its customers, its staff, its shareholders or its pensioners," he stated.

Earlier this month Mr Tchenguiz raised his stake in Sainsbury''s from 4.67 per cent to 5.07 per cent.