Morrisons has kick-started plans to sell off some of its supermarkets in a bid to raise cash during difficult economic conditions.
The grocer’s owner Clayton Dubilier and Rice (CD&R) is reportedly seeking to sell and lease back five Morrisons supermarkets.
If such a transaction were to go ahead, it would be the first deal of its kind the Bradford-based retailer has sanctioned in its 123-year history.
Property agents from BNP Paribas have started to sound out buyers for the stores, according to The Sunday Times. CD&R is thought to be seeking £150m for the shops, which will come with 20-year leases and rent increases linked to inflation.
CD&R won the £7bn auction for Morrisons a year ago and had the takeover rubber-stamped by the Competition and Markets Authority in June this year.
When the US private equity firm beat fellow bidder Fortress to the deal, it said it did not intend to launch “any material store sales or leasebacks”. That commitment, however, lapses after one year under takeover regulations.
CD&R is already planning to sell and leaseback warehouses and food manufacturing sites. React News reported last month that property investor ICG-Longbow is leading the race to snap up the sites, in a deal that could raise as much as £750m for Morrisons.
CD&R told The Sunday Times that the mooted store disposals represented just 1% of Morrisons’ supermarket portfolio. It added that its acquisition of c-store chain McColls offered evidence of its ambitions to invest in Morrisons and grow the business.
Morrisons owns 86% of its 497 supermarkets – a higher proportion than any of its mainstream grocery rivals.
The grocer’s late founder, Sir Ken Morrison, resisted pressure to sell and lease back any of its stores, insisting the properties were valuable assets.
But Morrisons has experienced a turbulent period of trading since CD&R completed its acquisition. Discounter Aldi has overtaken Morrisons to become the UK’s fourth largest grocer and, according to Kantar, sales at the retailer fell 3.9% in the 12 weeks to October 2, making it the worst-performing major supermarket during the period.
Morrisons’ underlying profits almost halved to £177m during its third quarter, although it insisted it finished the period with “good momentum” heading into the crucial golden quarter.
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