Asda has offloaded 24 stores and its Lutterworth depot in sale & leaseback deals, raising £568m.
Ten of the stores and the Lutterworth depot have been sold to Blue Owl Capital and another 10 to a joint venture between Blue Owl and property investment fund Super Income REIT.
The remaining four – in Small Heath, Colindale, Coventry Abbey Park and Killingbeckand – have been sold to DTZ Investors.
All the properties are subject to 25-year lease agreements, with a contractual option to renew for an additional 10 years at each renewal point.
“Asda’s property strategy is centred on maintaining a strong freehold base while also taking a considered and selective approach to unlocking value from our estate where appropriate,” said an Asda spokesperson.
“These transactions reflect that approach, enabling us to realise value from the sites while retaining full operational control.”
Supermarket Income REIT announced its JV acquisition of the 10 “high-performing omnichannel supermarkets” for £196m this morning. The stores are in locations including Cornwall, Wales, and County Durham.
Supermarket Income REIT CEO Rob Abraham said the transactions “further demonstrate our ability to deliver on our strategy, as we continue to successfully drive returns for our shareholders”.
Blue Owl was advised by Atrato.
According to the FT, Asda will use the proceeds from the sale to pay off Walmart, which retained a 10% stake in Asda following its sale to TDR and the Issa brothers in 2021.
The structure of the sale left Asda owing Walmart so-called payment-in-kind interest, meaning by 2028, Asda could owe Walmart £900m. Asda is reportedly looking to pay off the debt next year before the interest rate begins to rise.
The agreements struck this week take the total amount TDR has raised from Asda’s property portfolio to more than £3bn.
Union GMB said the latest deal was “yet more asset-stripping”.
“Asda’s owner, TDR Capital, is selling off yet more assets to settle the debt liabilities heaped on the business by its own borrowing,” said GMB national officer Nadine Houghton.
“Debt is up, lease liabilities are up, interest payments are up – but market share and staff morale are rock bottom.”
She said GMB members were reporting “increased stress levels brought about through asset stripping”.
“Asda was once one of the UK’s biggest retailers – where will it all end?” she added.
Asda previously sold about 30 stores in 2023 to raise half the £1.1bn it needed from property deals to fund its takeover of EG Group’s UK and Ireland operations.
The Issa brothers used just £200m of equity to fund the buyout of Asda, funding it primarily through debt and the proceeds of Asda’s asset sales.
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