Morrisons is on the verge of a significant financial shift, poised to trim £331 million off its debt.
- The supermarket giant has entered a 45-year ground rent agreement with Song Capital, impacting 75 stores.
- Morrisons maintains ownership of the stores’ freeholds, securing long-term control.
- The financial move coincides with the release of Morrisons’ quarterly performance results.
- Chief Financial Officer Jo Goff announced strong growth across all Morrisons divisions.
Morrisons, a leading name in the grocery sector, is strategically positioned to reduce its debt by £331 million. This development follows the penning of a 45-year ground rent deal with the real estate investor, Song Capital. This agreement allows Song Capital to draw an income stream from 75 Morrisons stores, effective until 2069. This decision has no impact on Morrisons’ ownership of the stores’ freeholds, ensuring that the company maintains its long-term operational control.
The debt reduction transaction was revealed in tandem with the company’s quarterly results, underscoring a well-rounded financial strategy. Notably, Morrisons was acquired by Clayton Dubilier & Rice in October 2021 for nearly £10 billion. At that time, a condition was set to retain freehold ownership of the stores, a mandate that has since lapsed, enabling current property arrangements.
Chief Financial Officer Jo Goff highlighted the robust growth throughout the quarter, mentioning expansion in all Morrisons sectors such as supermarkets, online platforms, convenience stores, wholesale, and the Myton Food Group. She stated, “Every part of Morrisons…showed good growth in the quarter, representing a robust performance across a diversified business.” This indicates a broadly successful operational quarter, complementing the financial manoeuvres underway.
Furthermore, Jo Goff remarked on the recent sale of their forecourt business, which also contributed to debt reduction. If the earnings from these transactions are deployed towards further debt repayment, Morrisons could see its debt decrease to roughly £3.6 billion, reflecting a 41% reduction from its peak.
Looking forward, expectations are set high for increased EBITDA and continued operational enhancements. The company’s strategic moves underscore Morrisons’ commitment to financial stability and growth, positioning it for potential future opportunities.
Morrisons is strategically advancing its financial position through a calculated property deal and operational success.
