Asda to sell stores only to rent them back as it struggles with debt pile

Supermarket concatenation Asda is selling 24 of its stores and volition rent them backmost arsenic it struggles with its indebtedness mound.

There volition beryllium nary alteration to the shops, nor its Lutterworth depot, which has besides been sold with a leaseback agreement, Asda said.

But the GMB national has criticised the determination arsenic "asset stripping" by the backstage equity-owned concatenation and said unit morale is being hurt.

Money blog: Market municipality with 12,000 residents Britain's slightest affordable

Private equity firms get businesses, put to amended their fiscal show and question to past merchantability them for a profit.

The GMB's nationalist serviceman Nadine Houghton said, "Debt is up, lease liabilities are up, involvement payments are up - but marketplace stock and unit morale are stone bottom."

"GMB members moving connected the store level and successful organisation proceed to study declining wellness and information standards and accrued accent levels brought astir done plus stripping."

Ownership

Asda was acquired from Walmart by billionaires Zuber and Mohsin Issa, backed by TDR Capital, successful 2020 for £6.8bn.

The supermarket had £3.8bn successful nett indebtedness astatine the extremity of 2024, the aforesaid arsenic astatine the extremity of 2023, its latest full-year accounts show.

Asda's ownership had been taxable to governmental scrutiny successful caller years.

MPs connected the Business and Trade Select Committee raised the contented successful hearings in July and December 2023.

The company's labyrinthine firm operation was the taxable of questions from MPs, arsenic determination are 16 antithetic entities betwixt the owners and the supermarket operating company, galore of them registered offshore.

Supermarket concatenation Morrisons is besides owned by backstage equity. Just implicit a twelvemonth ago, it struck a £370m woody to unlock worth from its spot portfolio arsenic it sought to shrink its indebtedness pile.

What's happening to the Asda stores?

Two abstracted buyers person been recovered for the shops: 4 - Small Heath successful Birmingham, Colindale successful London, Coventry Abbey Park and Killingbeck, Leeds- person been sold to existent property manager DTZ Investors and leased back.

Twenty shops and the Lutterworth depot person been sold to backstage recognition radical Blue Owl Capital and besides leased back.

The leases volition past 25 years with an enactment to renew for an other 10 years.

The transactions person raised £568m, an Asda spokesperson said.

"Asda's spot strategy is centred connected maintaining a beardown freehold basal portion besides taking a considered and selective attack to unlocking worth from our property wherever appropriate.

"These transactions bespeak that approach, enabling america to realise worth from the sites portion retaining afloat operational control."