A £500m sale and leaseback transaction for 18 Sainsbury’s stores announced last week has collapsed.

On 21 September the supermarket announced it was in discussions to sell 18 supermarket stores to LXi REIT on a sale and leaseback basis.

Media report suggests the deal would be work in the region of £500m

However, LXi REIT has this morning said that, given current stock market volatility, it is not proceeding with the share issue that would have part-funded the transaction.

Therefore Sainsbury’s discussions with LXi REIT over the transaction have ended.

Sainsbury’s previously stated that if the LXi transaction were to proceed, the cash received from this transaction would have been used to part-fund the purchase of 21 freehold Sainsbury’s supermarkets from the Highbury and Dragon portfolios.

It said purchase of these 21 stores will still complete in the first half of the financial year to March 2024, despite today’s news..

Sainsbury’s said that, given the strength of its balance sheet and property portfolio, it has “a wide variety of alternative options to finance this transaction”.

Meanwhile, Supermarket Income REIT has bought a Tesco supermarket, an Iceland Food Warehouse and complementary non-grocery units in Bradley Stoke, Bristol, for a total purchase price of £84m.

The 19.8 acre site includes a 74,717sq ft net sales area Tesco supermarket with a 16-pump petrol filling station and 925 car parking spaces.

The store is an online hub for Tesco, operating 20 home delivery vans and a dedicated Click & Collect facility. Tesco has operated at the site since the 1980s and through an extensive refurbishment, expanded the store in 2007.

The site also includes an Iceland Food Warehouse and further complementary units providing convenience and health services with tenants including Boots, Greggs, Costa Coffee and Pets at Home.

The site is being acquired from CBRE Investment Management. The Tesco store has an unexpired lease term of 14 years, with annual, upwards-only, RPI-linked rent reviews.