Stores giants' £1.2bn on site deals

THREE major retailers, Tesco, Boots and Debenhams, are hoping to raise almost £1.2bn by selling off some store sites and leasing them back. Boots is understood to be seeking a buyer for £300m worth of freehold and long-leasehold property.

Boots said: 'We are adding space, not downsizing.'

The company is under pressure to restructure its business to improve growth. The group runs 1,400 stores, one third of which it owns freehold. Its headquarters are on a 300-acre freehold site in Nottingham that also includes some manufacturing capacity.

Debenhams is in the market for a £500m sale and lease of its stores, including London's Oxford Street outlet. The stores group was bought out by a private equity consortium for £1.7bn in December 2003.

The investors, CVC Capital Partners, Merrill Lynch Global Private Equity and Texas Pacific, are understood to have borrowed against the value of the group's property to finance the deal.

The £500m raised from the sale could go towards refinancing the business or funding accelerated expansion of the 107-stores network.

Tesco is sitting on £13bn worth of property. The supermarkets group is understood to be driving a deal to retain 50% of certain sites in a sale-and-leaseback scheme to raise £380m.

Tesco confirmed that it intends to do deals to maintain a balance of freehold and leasehold properties, but said nothing had been finalised.