Supermarket Sainsbury’s has agreed a £500 million deal to sell 18 stores to a London-listed real estate investor and then lease them back.

Real estate investment trust LXi REIT said it has exchanged contracts for the store portfolio, but that completion of the deal is dependent on it securing an equity fundraising.

LXi is in discussions with investors over a possible share sale, as well as taking on new debt, to finance the purchase.

The agreement will see Sainsbury’s sell the stores, which are prime sites located across the south of England, to LXi and then rent them back.

Sainsbury’s also said on Wednesday it had separately reached agreement on the price it will pay to fully buy out 21 stores from the Highbury and Dragon investment vehicles.

The grocer said the cash from the proposed sale and leaseback with LXi REIT would be used to part-fund the Highbury and Dragon deal.

Sainsbury’s has held a 49% stake in the Highbury and Dragon sites since they were set up in 2000.

The retailer said that both deals “would result in a broadly unchanged proportion of leasehold and freehold Sainsbury’s supermarkets, with ownership and lease structures better reflecting current market conditions and our priorities”.

Sainsbury’s agrees £500m sale and leaseback deal for 18 stores