Asda has launched a £8.6bn review of its property estate as the billionaire brothers behind the business scramble for options to reduce its debt pile, according to reports.
According to reports in The Telegraph, owners Mohsin and Zuber Issa backed by private equity backers TDR Capital, are targeting the sale and leaseback of Asda’s supermarket estate to help aid soaring interest bills.
Market sources told the outlet that property experts have been drafted in to “assess the prospects for the supermarket’s estate”.
According to Asda’s 2021 annual report its freehold properties were valued at £8.6bn.
As part of the process, it’s understood that Asda owners will look to hold on to a “sizable underpin of freehold properties” even if that means some of its sites are sold to investors and then leased back.
While a sale and leaseback of Asda properties could help lower debt, the supermarket also puts itself at risk of reducing interest payments in exchange for higher rent.
The Issa brothers, which acquired Asda last year in a multi-million takeover deal, were also reported to be potentially merging the business with its petrol forecourts business EG Group before EG’s 2025’s £7bn refinancing.
By combining the two businesses – both of which are profitable – the billionaire owners would look to refinance EG Group’s debt on more favourable terms.
At the time, it was reported that the deal may be structured as an acquisition of EG UK by Asda. The brothers are being advised by bankers Barclays and Rothschild.