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LXi REIT scraps deal to buy Sainsbury's stores

FILE PHOTO: A view shows Sainsbury's logo in Milton Keynes

(Reuters) -Property investor LXi REIT said on Monday it is pulling out from a deal to buy Sainsbury's stores in southern England after suspending an equity funding, citing stock market volatility.

LXi had last Wednesday said it was in talks with the grocer to buy 18 supermarkets for 500 million pounds ($531.50 million) in a sale and leaseback deal, but the purchase was conditional on the investor raising the necessary equity funding.

Since then UK stocks have been gyrating on fears of an impending recession and concerns over a huge increase in borrowing due to Britain's new tax cuts and spending plans.

On Monday, the sterling tumbled nearly 5% to an all-time low.

Sainsbury's also separately confirmed it was no longer in talks with LXi regarding the store sale, and said it will have no impact on its financial guidance.

($1 = 0.9407 pounds)

(Reporting by Sinchita Mitra in Bengaluru; Editing by Dhanya Ann Thoppil)