Supermarket Sainsbury's has entered talks to sell and lease back 18 of its stores in a deal worth around £500 million, it has been reported.

The stores, all located in the South of England, would then be owned by London-listed real estate investment trust LXi REIT, but the supermarket giant would then rent them back. 

The potential stores that are being lined up in this deal have not been identified, but stores in Chippenham, Devizes, Calne, Melksham, Trowbridge, Salisbury, Bradford-on-Avon and the two in Swindon could all be on the table.

LXi is in discussions with investors over a possible share sale to raise some funding for the deal.

Sainsbury's has reached a price to fully buy out 21 stores from the Highbury and Dragon investment vehicles, of which it currently owns 49 per cent, and the money from this deal will be used to fund that. 

The retailer added 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”.

A number of other suitors are alleged to have been interested after Sainsbury's alluded to the fact it was looking to sell the sites a number of months ago.