Asda is looking to sell around 20 supermarket stores for £400m to help raise funds for its turnaround plan.
The retailer plans to lease the sites back for around 20 years in a ‘sale and leaseback’ scheme. These have become increasingly common in recent years as a means for supermarkets to help shore up their balance sheets.
Asda itself sold off about 30 stores in 2023 to raise around half the £1.1bn it needed from property deals to fund its takeover of EG Group’s UK and Ireland operations.
In total that year, property worth more than £2.2bn was sold for sale and leaseback, comfortably beating the previous high of £1.9bn in 2021. This included a deal by the John Lewis Partnership to sell and lease back a dozen of its Waitrose supermarkets for £150m.
The year after, Morrisons raised £331m through the sale of 76 of its supermarkets.
“Sale and leasebacks have been a feature of the retail industry for many years,” said an Asda spokesperson.
“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.”
Asda has appointed property adviser Eastdil Secured to find a prospective buyers, according to Green Street News, which first reported the news.
Asda’s latest move follows the return of former CEO Allan Leighton in November. Leighton was brought back to try and revive Asda’s fortunes as shoppers ditch the supermarket in their droves.
His strategy has included launching a supermarket price war, which some analysts estimate will cost the company about £900m over the next three years.
After it reported a 3.4% drop in annual sales in March, Leighton spelled out plans to “materially reduce” profits this year to invest in better prices.
The supermarket also remains laden with around £4.7bn in debt, according to Moody’s, a legacy of its highly leveraged takeover by TDR Capital and the Issa brothers in 2021.
However, Leighton said earlier this year this was having no impact on investment. Asda completed a £3.2bn refinancing in May last year, pushing its near-term debt maturities into the next decade.
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