TDR Capital and Clayton, Dubilier & Rice – the PE owners of UK supermarket chains Asda and Morrisons respectively – have raised a combined £6.5bn through the sale of property assets, as both groups seek to reduce debt accumulated during highly leveraged buyouts, according to a report by the Financial Times.
The deals which come amid a challenging retail environment have seen London-based TDR Capital, which acquired Asda in 2021 alongside the Issa brothers, generate approximately £3.3bn from the disposal of supermarkets, distribution centres and petrol forecourts. CD&R meanwhile, which completed its £7bn acquisition of Morrisons in 2022, has raised around £3.2bn from similar property transactions, according to research by the Financial Times and data from Cushman & Wakefield.
Much of the capital has been raised through sale-and-leaseback deals, with both retailers typically remaining as tenants and paying rent to new property owners. The transactions reflect efforts to address the significant debt burdens left by acquisitions completed towards the end of the low interest rate cycle, just ahead of a sharp rise in borrowing costs.
At Asda, proceeds have included £1.7bn from a sale-and-leaseback of 27 distribution warehouses with Blackstone, which helped finance the original takeover. More recently, TDR raised £568m through two supermarket sale-and-leaseback deals in November, ahead of upcoming debt repayments linked to Asda’s former owner, Walmart. Executive chair Allan Leighton has described the transactions as opportunistic, highlighting the need to fund store refurbishments while reducing leverage.
CD&R has pursued a similar strategy at Morrisons, most notably through the £2.5bn sale of 337 petrol forecourts to Motor Fuel Group in 2024. Morrisons retained a minority stake in the forecourt operator as part of the deal, with proceeds used to pay down debt that stood at £5.5bn following the buyout. Morrisons has since reduced net debt by 43% to £3.4bn.
While proponents argue that sale-and-leaseback structures allow retailers to redeploy capital more efficiently, critics note that such deals reduce asset backing and increase fixed lease obligations. Both Asda and Morrisons have also raised additional financing via ground rent structures, securing debt against supermarket sites while committing to ongoing lease payments.
The property disposals come as both retailers attempt to regain market share lost to rivals including Aldi and Lidl. Under private equity ownership, Morrisons’ market share has declined from 9.5% to 8.3%, while Asda’s has fallen from 14.4% to 11.5%, according to Kantar data. Both companies have said they are focusing investment on convenience retail and online channels, which are not fully captured in traditional grocery metrics.
Despite the asset sales, both groups retain significant property ownership. Asda said more than 60% of its estate remains freehold or long leasehold, while Morrisons continues to own over 80% of its properties outright.
