Asda has sold off another tranche of stores as it looks to raise cash to pay off its mounting debt pile.
Property investment fund Supermarket Income REIT announced this morning it had bought 10 Asda stores in a sale and leaseback deal for £196m. The stores are in locations including Cornwall, Wales, and County Durham.
The stores were bought through the fund’s joint venture with US asset manager Blue Owl.
In a separate deal, Asda is offloading four supermarkets in Birmingham, Greater London, Coventry and Leeds for £101m to three local authority pension funds, the Financial Times reported this morning.
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.
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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