Asda’s billionaire owners, the Issa brothers, are negotiating a property deal worth approximately £500m.
- Macquarie Asset Management is set to buy ground rent leases for 50 Asda stores in a 50-year agreement.
- The deal allows Asda to repurchase ownership with minimal cost at the term’s end, lowering rental expenses while alleviating debt.
- A prior deal with Realty Income Corporation involved a sale-and-leaseback for 25 stores worth £650m.
- The Issa brothers are strategically reshaping their portfolio with significant transactions within and outside the UK.
Asda’s owners, billionaires Mohsin and Zuber Issa, are reportedly in discussions to sell part of the supermarket’s property holdings, with a transaction estimated around £500m. The Australian firm, Macquarie Asset Management, is nearing a deal to acquire ground rent leases associated with 50 Asda stores across Britain. This agreement spans 50 years, with a built-in provision for Asda to regain ownership at a small cost after the term concludes.
This strategic arrangement permits Asda to incur relatively low rental costs while simultaneously generating substantial capital to address its increasing debt concerns. In essence, the deal is structured to provide financial flexibility and debt relief for Asda as it navigates the competitive grocery market.
In a previous transaction this July, the Issa brothers executed a sale of 25 of Asda’s stores to the US-based Realty Income Corporation, valued at £650m. Asda will continue to lease these properties, maintaining operational stability while benefiting from the capital influx.
Earlier this year, a $1.5bn sale-and-leaseback strategy was implemented to offload part of the Issa brothers’ EG Group’s US property portfolio, involving 415 stores being sold to Realty Income on the US East Coast. This demonstrates a consolidated approach in managing their extensive portfolio, balancing between divesting and reinvesting in varied markets.
Also notable is EG’s sale of its UK and Ireland operations to Asda for £2.27bn. This acquisition includes 350 petrol station sites and over 1,000 food-to-go locations, enhancing Asda’s market position and extending its geographical reach within the UK.
These strategic decisions reflect the Issa brothers’ efforts to enhance Asda’s financial and operational standing through calculated real estate transactions.
