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Tesco sells some stores - a good example of a sale and leaseback

Jim Riley

28th July 2010

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Here’s a great example to use with students if you need to explain the concept of a sale and leaseback (a common “source of finance” referred to in the textbooks).

The Independent reports on how Tesco has recently sold the land and buildings of 41 of its stores - but then entered into long-term leasing arrangements with the new landlord so that it can continue to operate them as Tesco stores.

Tesco, which raised around £900m from the transaction, is essentially swapping a fixed asset (the store land & buildings) for cash & a long-term leasing liability.

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Jim Riley

Jim co-founded tutor2u alongside his twin brother Geoff! Jim is a well-known Business writer and presenter as well as being one of the UK's leading educational technology entrepreneurs.

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