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News Release

London

JLL comments on Morrisons trading figures and business restructure


LONDON, 13th March 2014 - Commenting on the release of Morrisons trading figures and their announcement of a business restructure, Tom Edson Head of Foodstores at JLL said: “Morrisons have at last unveiled how they can unlock some of the value of their property portfolio, in the form of £1bn of sales over the next 3 years. Sir Ken Morrison may not agree with this strategy, but in reality the firm do not need to sell the "family silver" to raise this capital.
“We wait to see what form these sales will take, as owning 90 percent of their foodstore freehold estate, a number of distribution sheds and some non-core assets, they will have a number of exciting choices to make on how to maximise returns on their portfolio,  whilst maintaining operational flexible leases and keeping debt and lease liabilities to a minimum.  

“The sale and leaseback path, if chosen, has to be undertaken with caution as there is a fine line to walk between maximising profits and controlling lease terms. With the best price comes the least ‘tenant friendly’ terms, such as long lease terms and no tenant break, but such terms would appeal to institutional property investors who will pay the best price.  
"Morrisons has a strong brand and there is no reason that their loyal Northern customer base can't push South. Whilst we understand the current price cutting policy, we believe that the grocer should also concentrate on those areas where the discount retailers can't compete, such as choice, provenance and quality."