Tesco in £12bn REIT play

In a surprise move the UK’s largest supermarket chain Tesco said it was
seriously considering taking advantage of the REITs announcement made in the
Budget by moving its £12bn property portfolio into a REIT.

The move would involve Tesco creating a separate quoted vehicle for its
property and then use the money raised from selling shares in this entity to buy
back its own shares, the Daily Telegraph reports.

If feasible, the move into a REIT would enhance shareholder returns. A REIT
is a quoted property vehicle that pays out 90% of its income to shareholders in
return for not paying any corporation tax. 

‘We’re obviously interested in the sense that we’re a big property company.
We’ve got people looking at it to see whether it’s a good idea,’ Tesco’s finance
director Andrew Higginson said.

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