Tesco aims to sell non-UK property

By Rachel Sanderson and William Kemble-Diaz

LONDON (Reuters) - Tesco (TSCO.L: Quote, Profile, Research, Stock Buzz), the world's fifth-largest retailer, aims to include non-UK property assets in its programme to release billions of pounds of value from its real estate, Finance and Strategy Director Andrew Higginson said.

Higginson said in an interview that Tesco, which owns about 80 percent of its freehold property outside its core British market and operates in 11 countries abroad, was also aiming this year to sell the next tranche of a property sell-off worth more than 5 billion pounds ($10 billion).

"We've sold over $1 billion. We've done four of them I think so far. Obviously we're looking to do more than 5 billion pounds. There will be another one this year I think," he said at the Reuters Consumer and Retail Summit in London.

Tesco's property sell-off has so far been restricted to Britain. It extended the program in April saying it would sell as much as a further 10 percent of its freehold property following activist pressure on rivals J. Sainsbury (SBRY.L: Quote, Profile, Research, Stock Buzz) and Carrefour (CARR.PA: Quote, Profile, Research, Stock Buzz) to unlock value from their real estate.

Higginson said he expected "probably over time" to extend Tesco's property sell-off to its international portfolio. Property yields in central Europe were particularly attractive, he said.

"No one was building in Central Europe when we started, so we built and we've got some fantastic assets there. We have the lakeside of Prague, a huge shopping development."

It could also consider the sale and leaseback of property in Turkey "in time", he said.

Higginson said Tesco's portfolio of stores was worth 28 billion pounds at the end of 2006 -- compared with the company's current market value of around 35 billion pounds, based on Reuters data.  Continued...