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Mohsin and Zuber Issa are on the brink of selling a part of Asda’s property portfolio to a US investor in a deal worth £650m, The Times has reported.
According to The Times’ understanding, following a “competitive” bidding process, the New York-based investor Realty Income Corporation is close to buying around 25 Asda stores on leases of up to 20 years. This equates to a net initial yield of about 6.5%.
The Issa brothers, who first bought the supermarket from Walmart in 2020 with help from private equity firm TDR Capital, are now targeting sale and leaseback transactions for the supermarket chain’s estate as a way to minimise its debt following rising interest rates.
This comes as the billionaire brothers believe a sale and leaseback of the retailer’s properties could solve the problem of reducing interest payments.
However, this decision could also risk paying higher rent.
In addition to the current sale of properties, the Issa brothers have also been looking to reduce the growing debt burden of its EG Group.
Earlier in March of this year, EG Group sold 415 store assets on the US East coast in a deal worth $1.5bn (£1.1bn).
Zuber Issa, co-chief executive, said: “[The] announcement 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.”
