Morrisons strikes warehouse sale and leaseback deal for £220m

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Morrisons is said to have entered a sale and leaseback deal to accelerate the rollout of its convenience store format.

The deal by the grocer, which is worth £220m, will allow it to accelerate the conversion of McColl’s stores into its convenience store format Morrisons Daily, according to a report in The Times.

Morrisons is said to have entered an agreement with FTSE 100 asset management firm Intermediate Capital Group, which will include contracts for seven of its distribution warehouses for up to 25 years.

The funds will allow Morrisons to convert almost 1,000 McColls stores, according to the report and also use a proportion of the cash injection to reduce selected product prices, as ammunition in the ongoing supermarket price wars.

Morrisons snapped up convenience store chain McColls for £189m in May, and almost 300 of the 1,100-strong estate are trading under the Morrisons Daily fascia, with Morrisons chief executive David Potts last month announcing plans to convert the rest within the next two years.

Potts said: “I am confident that McColl’s can, in the Morrisons family, once again become a growing, thriving and vibrant convenience business serving local communities across the UK.”

Jo Goff, Morrisons Chief Financial Officer, said: “We continue to invest in our strategy of becoming a broader, stronger, more popular and more accessible business and this transaction will help to finance further investment. The acquisition of McColl’s earlier this year gave us a leading position in the UK convenience market and next year we plan to open a further five supermarkets across the UK, and to invest further in our manufacturing operations.”