Asda plots £400m store sell-off to raise cash
Asda is planning to sell about 20 supermarket stores for £400m to generate more cash for the business.
The supermarket chain is looking to offload the stores, which are located across the country, and lease them back for around 20 years.
It has appointed property adviser Eastdil Secured to seek out buyers, according to property-focused publication Green Street News.
Sale-and-leaseback deals are popular among major supermarkets as a means of raising capital to shore up their balance sheets.
Sainsbury's sold and leased back some of its supermarkets for £500m in 2022, while Morrisons completed a £220m deal with asset manager ICG during the same year.
In Asda's case, the retailer has been saddled with a hefty £3.8bn debt pile after a £7bn takeover in 2021 by private equity firm TDR Capital and brothers Mohsin and Zuber Issa.
Zuber stepped down as co-chief executive in June, selling his stake in the retailer to TDR. Mohsin followed suit in stepping down from his leadership role in September, but kept his shares.
Allan Leighton, a former chief executive of Asda, returned to the business in November after a 24-year absence, to help turn its fortunes around.
His strategy has included launching a fresh supermarket price war, which involves funding price cuts, improving the availability of products and refreshing tired stores. Analysts have estimated that the company's plans will cost close to £900m over the next three years.
Leighton has warned that Asda's profits will suffer a 'material hit' this year to fund that investment drive, along with cuts to jobs and bonuses.
Despite Asda's debt pressures, Mr Leighton appears to be relaxed about the issue. He said in March: 'People always ask me about the balance sheet, but I'm not over-concerned about it.
'Most of our [debt] maturity dates have been pushed well out [into the future]. The only time I'd ever be concerned about [it is] if I felt that was restricting us investing in the business.'
He also continues to search for a new chief executive for the business.
An Asda spokesman said: ' Sale-and-leasebacks have been a feature of the retail industry for many years.
'While maintaining a strong freehold base remains central to Asda's property strategy, we will consider suitable opportunities to unlock value from our property portfolio as part of our material programme of investment into the business.'
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