Mr Stewart ruled out a return to sale and leasebacks, saying Tesco was looking at buying back freeholds, which would help reduce its rent liabilities. Mr Stewart said that Tesco plans to spend around £23m in the next two years buying back property. The retailer is also in discussions about selling space to other retailers and restaurants, including McDonald’s, which will help drive footfall. It also plans to deepen its ties with Sir Philip Green’s Arcadia brands, including Dorothy Perkins and Burton. Internationally, the group has tied up with Sports Direct and H&M, which has resulted in a 28pc sales increase. Analysts at Bernstein expect Tesco could generate around £500m in earnings from subletting space in hypermarkets.
Tesco is reportedly planning to turn some of its largest urban supermarkets into mini-villages with hundreds of homes as part of a radical strategy to overhaul its estate, which analysts say could raise £around £400m. According to Tesco’s CFO, Alan Stewart, the sale of Tesco’s air rights could generate 1.5bn and the plans have added appeal because they could go some way to solving Britain’s housing crisis. Tesco and other supermarkets are in discussions with property developer Apex Airspace about building homes which will be constructed off-site and lifted into place on top of their buildings.