Morrisons, the UK’s fifth-largest supermarket chain, is exploring a £1bn property deal amid its battle to recapture the ground it has lost to rivals including Sainsbury’s and Aldi.
Sky News has learnt that Morrisons, which is based in Bradford, West Yorkshire, has engaged the real estate advisory firm CBRE to evaluate options for raising finance secured against part of its large freehold store portfolio.
Sources said the process was at an early stage, but that it was unlikely to involve a conventional sale-and-leaseback transaction of the kind favoured by major grocers in recent decades.
One option expected to be considered is a medium- or long-term borrowing deal secured against a number of Morrisons’ supermarkets.
Read the latest from the Money blog
Any agreement could raise as much as £1bn, although neither the structure nor size have yet been determined.
Morrisons, which trades from approximately 500 supermarkets in the UK and employs about 95,000 people, was taken private from the stock market by Clayton Dubilier & Rice, the US-based buyout firm, in 2021 in a deal worth close to £10bn including debt.
List of closures as hundreds at risk of redundancy due to Morrisons shutting cafes, meat counters and convenience stores
Morrisons takes legal action to stop farmers’ protests
Supermarket giants face £200m hit from Reeves’ NI hike
Its performance since then has been patchy, with Aldi overtaking it last year to become the UK’s fourth-biggest grocer by sales.
In 2023, the company named Rami Baitieh, a former Carrefour executive, as its new chief executive in an attempt to arrest its decline.
Morrisons owns the freeholds to roughly 80% of its store estate, among the highest levels in the sector.
One source said that releasing £1bn of value through a sale-and-leaseback or leverage-based transaction would still leave the proportion at wholly owned stores at about 60%.
The company has been steadily paying down the debt it took on as part of CD&R’s takeover, with only about £1bn of acquisition finance left to be repaid.
Be the first to get Breaking News
Install the Sky News app for free
Read more from Sky News:
Supermarket fuel profit margins soar
Lidl wins battle to open in-store pub
Asda to sell stores only to rent them back
Morrisons has no short-term debt maturities, the source said, meaning it was under no pressure to strike a property deal.
During a hotly contested battle to buy the supermarket chain, CD&R pledged not to engage in significant disposals of store freeholds for a limited period.
Since then, its main real estate activities have involved the sale of non-store assets.
In 2024, it struck a partnership with Song Capital, an investment firm, which paid £370m for the right to receive an income stream from 75 of the chain’s supermarkets for 45 years.
Keep up with all the latest news from the UK and around the world by following Sky News
Along with Asda, Morrisons is one of the two major UK grocers now owned by private equity firms.
Asda is owned by TDR Capital, while former owner Walmart retains a residual financial interest.
Last month, Morrisons published results which it said showed “strong” Christmas trading.
“2024/25 was another year of renewal and modernisation for Morrisons. In a year when consumers were feeling the squeeze, we grew like-for-like sales for a twelfth consecutive quarter, maintained EBITDA and our market share, and demonstrated our resilience in the face of some tough external headwinds,” Rami Baitieh, chief executive, said.
Morrisons declined to comment on a prospective real estate deal.
