The billionaire Issa brothers are considering finalizing a £650 million deal to sell a portion of Asda's property portfolio to a US investor.
Mohsin and Zuber Issa, who acquired the supermarket giant in 2020 in partnership with private equity firm TDR Capital, are pursuing sale and leaseback transactions for Asda's properties to reduce the company's substantial debt burden amidst rising interest rates.
After a competitive bidding process, it is reported that Realty Income Corporation, a New York-based investor, is nearing the purchase of approximately 25 Asda stores on leases of up to 20 years. According to the industry newsletter React News, the deal is valued at a net initial yield of around 6.5 percent.
The sale and leaseback of the Asda property could solve the problem of lower interest payments but could lead to another problem of higher rents. The Issa brothers have also sought to reduce the growing debt burden of their EG Group, which sold 415 stores on the U.S. East Coast in a $1.5 billion leaseback sale in March.
"Аnnouncement demonstrates the progress we continue to make to put in place a robust capital structure for the medium term that will underpin our long-term strategy and represents an important first step in this process.", - commented co-chief executive Zuber Issa.
Asda is a well-known British supermarket chain that operates many stores throughout the United Kingdom. The company was founded in 1949 and has since grown to become one of the leading retailers in the country. Asda offers various products, including groceries, clothing, household goods, electronics, and more.
In 2020, Asda was acquired by the Issa brothers, Mohsin and Zuber, in partnership with TDR Capital. Despite the ownership change, Asda continues operating under its brand name and remains a prominent player in the UK retail market.