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Morrisons is in discussions with multiple parties, including U.S.-based Realty Income, for a real estate financing transaction valued at around USD 803 million. The proposed arrangement is expected to differ from a traditional sale-and-leaseback structure and could instead be backed by a portfolio of the retailer's stores. The move follows the company's earlier efforts to unlock value from its freehold property assets as it continues to streamline operations amid intense competition, changing consumer spending patterns, and rising cost pressures in the UK grocery market.
British supermarket chain Morrisons is holding discussions with several parties, including U.S.-based Realty Income, for a real estate transaction valued at around USD 803 million, according to a Sky News report that cited industry sources.
The report stated that the proposed transaction is not expected to follow the conventional sale-and-leaseback model, which is commonly used by retailers to release capital from property assets while continuing to occupy their stores. Instead, the financing is likely to be structured around a portfolio of Morrisons' stores, allowing the company to raise funds without pursuing a standard property sale.
The development comes after reports from earlier this year that Morrisons had appointed global real estate advisory firm CBRE to explore options for raising up to GBP 1 billion by leveraging part of its freehold store portfolio. The exercise was aimed at identifying ways to unlock value from the retailer's significant property holdings while maintaining operational flexibility.
Morrisons has been taking steps to simplify its business and improve operational efficiency as competition in the UK grocery sector continues to intensify. The retailer has also been facing pressure from weaker consumer spending, while higher energy costs linked to global geopolitical tensions have added to operating expenses across the retail industry.
The company, which is owned by U.S.-based private equity firm Clayton, Dubilier & Rice, has been losing ground to larger rivals Tesco and Sainsbury's. It also recently slipped behind German discount retailer Lidl, which moved ahead to become the UK's fifth-largest supermarket chain, according to industry data. Morrisons is currently the country's sixth-largest grocery retailer.
Morrisons owns one of the largest freehold property portfolios among UK supermarket operators, making its real estate assets an important source of potential funding. Retailers have increasingly explored property-backed financing in recent years to strengthen balance sheets, fund investments and improve financial flexibility without disposing of key operating assets.
Neither Morrisons, Realty Income nor CBRE had responded to Reuters' request for comment at the time of publication.
Source Reuters
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