Property investor LXi REIT is pulling out from a deal to buy Sainsbury's stores in southern England after suspending an equity funding, citing stock market volatility.
LXi REIT had last Wednesday said it was in talks with the grocer to buy 18 supermarkets for £500 million (€553.3 million) in a sale and leaseback deal, but the purchase was conditional on the investor raising the necessary equity funding.
Since then UK stocks have been gyrating on fears of an impending recession and concerns over a huge increase in borrowing due to Britain's new tax cuts and spending plans.
On Monday, the sterling tumbled nearly 5% to an all-time low.
'No Longer In Talks'
Sainsbury's also separately confirmed it was no longer in talks with LXi regarding the store sale, and said it will have no impact on its financial guidance.
The retailer said in a statement, 'LXi REIT has this morning announced that given current stock market volatility it is not proceeding with the share issue that would have part-funded the transaction. Hence we are no longer in discussions to sell these stores to LXi REIT.'
It said that the funds from the LXi REIT transaction would have been used to part-fund the purchase of 21 freehold Sainsbury's supermarkets from the Highbury and Dragon portfolios, but added that it has 'a wide variety of alternative options' to finance this transaction.
The purchase of these 21 stores will complete in the first half of the financial year to March 2024, the retailer said.