Tesco sells mothballed supermarket sites for £250m

Supermarket giant Tesco is selling off more than a dozen sites that it no longer wants to develop to a property company in a £250m deal.

Some 10,000 homes could be built on the sites in London, the South East and Bath.

They are part of nearly 50 projects which Tesco said earlier this year it was abandoning, many of which are now derelict.

The decision was part of the supermarket's revival strategy.

Tesco is selling the sites to Meyer Bergman, a property investment firm.

Markus Meijer, its chief executive, said the investment would give new impetus to the abandoned Tesco projects.

Tesco said in January that it was shelving plans to open 49 large supermarkets - some of which had already been built - as well as closing 43 unprofitable stores.

The move formed part of chief executive Dave Lewis's strategy to restore the company's fortunes in the wake of an accounting scandal in 2014.

However, the decision to abandon planned new stores attracted criticism. Pat McFadden, Labour MP for Wolverhampton South East, where a major supermarket plan was mothballed, said that the local community felt let down.

Alan Stewart, chief financial officer, told BBC Radio 4's Today programme that Tesco would not be developing stores on the mothballed sites it still owned.

"We don't have the resource to put into these developments," he said. "The right decision for us and the business is not to go ahead."

Clive Black, head of research at Shore Capital, commented: "After many years focusing on new stores, it is now all about making the existing ones better, conserving cash and trying to reduce its exposure to debt, rents and pension responsibilities. Hence Tesco is selling sites that it once aspired to open shops on.

"The journey has started, but there's a long road ahead before we can say Tesco is in calmer waters and sailing into much brighter times."

Shares in Tesco closed flat at 192.4p, valuing the company at almost £15.8bn. The stock has fallen by almost 50% over the past two years.

Mr Stewart knows that selling lucrative sites in the south-east of England is somewhat easier than more marginal sites across the north of England, for example.

As yet, there is still no timeline for selling the rest of the sites, which for the moment will remain padlocked and unused.

Read more from Kamal here: Tesco: Houses are more lucrative than shops

The development sites being sold by Tesco include:

- Fulham High Street

- Highams Park (next to existing Tesco store)

- Hounslow (Hounslow bus garage)

- Lewisham (next to existing Tesco store)

- New Barnet (East Barnet Road)

- St Albans (London Road)

- Tolworth (Former MOD site next to Tolworth Broadway and A3)

- Hillingdon Master Brewer Site (Hillingdon Circus)

- Woolwich Phase 3 and 4 (next to existing Extra store)

- Epsom (Upper High Street)

- Kensington (next to existing Cromwell Road store, pictured below)