Supermarkets are resorting to selling their stores to generate immediate cash flow.
Leading the trend are Asda and Morrisons, both burdened with significant debt loads, who orchestrated deals to offload their shops and warehouses last year.
In these transactions, the grocers sell the property but retain the option to lease it back from the new owner, allowing them to continue operating at the same sites.
Such sale and leaseback arrangements surged in popularity in 2023, accounting for nearly half of all property deals, a stark contrast to just one percent in 2022, data from research group Colliers found.
These deals serve as a means for supermarkets to unlock cash tied up in real estate, providing funds to pay down their debts.
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This Is Money reports that Morrisons completed £450m sale and leaseback transactions during its financial year to 29 October, 2023.
While Asda sold 25 supermarkets to US property investor Realty Income Corporation in a £650m deal as the Issa brother look to reduce the growing debt burden of their EG Group.
Morrisons carries a net debt of £8.6bn, while Asda’s stands at £4.2bn.
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