The British Land Company and Tesco have formed a GBP650m (US$1.27bn) property joint venture, with British Land covering 21 Tesco supermarkets for 20 years.

The UK's largest retailer said today (21 March) that the deal, the second phase of its property sale and leaseback programme announced in April last year, is expected to generate net proceeds of GBP570m. Tesco has pledged to free up cash from its property assets and return GBP1.5bn to shareholders through a buyback scheme. The company previously announced a similar transaction with British Airways Pension fund in January, a move that raised GBP445m.

The move comes as European retailers, notably Carrefour and Sainsbury's have come under increasing pressure to unlock the value of property in order to increase returns to shareholders.

The portfolio has an initial rent of GBP29m per annum.

"The venture enables Tesco to release funding for its future growth, whilst maintaining the flexibility to operate and adapt its property assets," the company said in a statement.

The 21-store deal account for around 3% of Tesco's UK property assets by square footage. The transaction is Tesco's fourth property venture with British Land.

Tesco shares were up 0.86% at time of press, increasing to 439.50 pence on the London Stock Exchange.