W.P. Carey Morrisons sale leaseback activity has intensified with the U.S.-listed REIT’s latest £51 million acquisition of two UK supermarket sites. The transaction, involving Morrisons locations in Loughborough and Ilkeston, marks the third such deal in under 12 months and highlights a broader trend: private equity–owned grocers monetizing real estate to stabilize operations, while institutional landlords collect inflation-linked rents under long-term, triple-net leases.
U.S. REIT Deepens UK Grocery Exposure with Latest Morrisons Deal
New York-listed real estate investment trust (REIT) W. P. Carey has acquired two Morrisons supermarkets in England for £51 million, the latest in a series of UK grocery real estate investments. The transaction includes sites in Loughborough and Ilkeston and reflects a growing reliance on sale-and-leaseback structures in the retail sector.
Both assets include petrol forecourts and are triple-net leased to Morrisons, allowing W. P. Carey to secure long-term, inflation-linked rental income while leaving operating costs to the tenant.
What the Deal Means for UK Grocery Real Estate
This marks the REIT’s third Morrisons-linked acquisition in under a year, following deals in Doncaster and London. The company’s head of European investments, Christopher Mertlitz, said the investment aligned with its strategy of acquiring “essential, well-located real estate backed by market-leading tenants.”
For Morrisons—owned by private equity firm Clayton, Dubilier & Rice—the move underscores a continued shift toward an asset-light model, freeing up capital to address operational and financial pressures. The company has faced steep losses since its 2021 buyout.
Sale-and-Leaseback: A Growing Model in Grocery Retail
Sale-and-leaseback structures are becoming increasingly common across UK supermarket chains, particularly among private equity–backed operators. While Tesco and Sainsbury’s have generally retained freehold ownership, Morrisons and Asda have actively monetized real estate to unlock liquidity.
Ben Green, a director at Atrato (adviser to Supermarket Income REIT), noted that “Morrisons has been doing leasebacks because it’s a cheaper source of capital.”
W. P. Carey’s strategy mirrors this trend, using net-lease arrangements to reduce downside exposure while collecting consistent rental streams. These properties also offer resilience during inflation cycles due to index-linked rent adjustments.
Supermarket Income REIT and Competitive Landscape
W. P. Carey is not alone in targeting food-anchored retail assets. Supermarket Income REIT (LSE: SUPR), a UK-listed specialist, has built a £1.8 billion portfolio including stores operated by Tesco, Sainsbury’s and Carrefour. The REIT recently reported a 10 percent year-on-year increase in rental income, despite a slight drop in property valuations.
Both REITs see UK grocery real estate as a reliable income stream with low vacancy risk and long lease duration, making it attractive amid wider commercial property volatility.
Long-Term Implications for Grocers and Investors
While sale-and-leaseback improves short-term cash flow for grocers, it introduces fixed costs and reduces future real estate flexibility. Operators may struggle to renegotiate leases in weaker trading environments, particularly when rents are inflation-linked.
For investors, the model offers consistent returns but carries tenant credit risk—especially in cases where retailers are highly leveraged. W. P. Carey and SUPR continue to focus on essential retail as a defensive real estate strategy.
