Morrisons is exploring a potential £1bn property financing deal as it looks to strengthen its position in an increasingly competitive grocery market.
According to reports in a leading financial news outlet, the Bradford-based supermarket group has appointed property advisory firm CBRE to assess options for raising funds secured against part of its substantial freehold store portfolio.
Sources indicate that discussions remain at an early stage and are unlikely to centre on a traditional sale-and-leaseback arrangement of the kind widely used by major grocers in previous decades. Instead, one option under consideration is a medium- to long-term borrowing facility secured against a selection of Morrisons supermarkets.
While any transaction could potentially raise up to £1bn, neither the final structure nor the scale of a deal has been confirmed.
Morrisons operates around 500 supermarkets across the UK and employs approximately 95,000 people. The business was taken private in 2021 by US buyout firm Clayton, Dubilier & Rice in a deal valued at close to £10bn including debt.
Since then, performance has been mixed. Aldi overtook Morrisons last year to become the UK’s fourth-largest supermarket by sales, intensifying pressure on the chain to regain lost ground to competitors such as Sainsbury’s and Aldi.
In 2023, Morrisons appointed Rami Baitieh, formerly of Carrefour, as chief executive in a bid to drive a turnaround strategy.
One of Morrisons’ distinguishing features is its extensive property ownership. The company holds the freehold on roughly 80% of its store estate, one of the highest proportions in the sector. Industry sources suggest that releasing £1bn through either a sale-and-leaseback or a leverage-based structure would still leave the business with about 60% of its stores in full ownership.
The supermarket has also been steadily reducing the debt taken on during the 2021 acquisition, with roughly £1bn of takeover financing reportedly still outstanding.
During the competitive bidding battle for Morrisons, Clayton, Dubilier & Rice committed to limiting major disposals of store freeholds for a defined period. Since then, most real estate activity has focused on non-store assets.
In 2024, the company entered into a partnership with investment firm Song Capital, which paid £370m for the right to receive income from 75 Morrisons supermarkets over a 45-year period.
Alongside Asda, Morrisons is one of the UK’s major grocers now under private equity ownership. Asda is owned by TDR Capital, with former parent Walmart retaining a minority financial stake.
Last month, Morrisons reported what it described as strong Christmas trading results. Rami Baitieh said the 2024/25 financial year marked another period of renewal and modernisation, highlighting twelve consecutive quarters of like-for-like sales growth, stable EBITDA and maintained market share despite challenging economic conditions.
Morrisons declined to comment on the prospect of a property financing deal.
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