// Asda owners the Issa Brothers are closing in on a deal worth £650m to sell off the supermarket’s property empire
// NYC investor Realty Income Corporation is said to be close to buying about 25 Asda stores on leases of up to 20 years
The billionaire Issa brothers are on the cusp of successfully selling off a piece of Asda’s property portfolio to a US investor in a deal worth £650m, according to The Times.
Mohsin and Zuber Issa, who bought the supermarket from Walmart back in 2020 with the private equity firm TDR Capital, are targeting sale and leaseback transactions for the grocer’s estate in a bid to minimise its hefty debt pile amid soaring interest rates.
The title reported that following a “competitive” bidding process, the New York-based investor Realty Income Corporation is close to buying about 25 Asda stores on leases of up to 20 years.
The price tag equates to a net initial yield of about 6.5%
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A sale and leaseback of Asda properties could solve the problem of reducing interest payments but could risk another of paying higher rent.
The Issa brothers have also been looking to reduce the growing debt burden of their EG Group.
Back in March EG Group sold 415 store assets on the US east coast in a sale and leaseback deal worth $1.5bn.
Commenting on the sale, co-chief executive Zuber Issa said: “[The] announcement demonstrates the progress we continue to make to put in place a robust capital structure for the medium term that will underpin our long-term strategy and represents an important first step in this process.”
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