LXi REIT the commercial property investor on the FTSE-250 index is expected to purchase nearly 20 Sainsbury’s freeholds.

Sainsbury’s is in talks to sell 18 stores in southern England to property investor LXi REIT for about 500 million pounds.

Both companies said they were discussing a sale and leaseback deal.

LXi REIT said it would fund the deal throughnew equity and debt. It said it would discuss with potential investors the possibility of an equity raising.

Sainsbury’s said it had reached an agreement on the price to buy 21 stores from the Highbury and Dragon investment vehicles. It said the deal would complete in the first half of its fiscal year to March 2024.

If the LXi REIT transaction goes ahead, the funds from the sale would part-fund the Highbury and Dragon deal.