The UK’s largest supermarket company Tesco has announced that it is to raise around £650m (US$1.2bn) from a new UK property joint venture.

As part of the deal, Tesco will sell 33 Tesco stores and two distribution centres, accounting for around 5% of Tesco property assets, to its joint venture with property group Topland.

Tesco said the venture would release funding for the company’s further growth whilst maintaining the flexibility to operate and adapt its property assets. 

Tesco finance director, Andrew Higginson, said Tesco would continue to operate the stores and decide on layout. The joint venture is for a term of 25 years with an option to review in 2011. Under the agreement Tesco’s rent liability will be subject to pre-agreed rents.