Morrisons is reportedly in talks over a £600m property-backed financing deal as it looks to strengthen its balance sheet and revive its challenge against Lidl.

The supermarket is understood to have held discussions with several potential partners, including US property investor Realty Income, about raising money against a portfolio of its stores.

Rather than a conventional sale-and-leaseback agreement, the proposed transaction could involve financing secured against Morrisons’ supermarket estate.

It appointed property adviser CBRE earlier this year to explore options for unlocking as much as £1bn from part of its freehold portfolio.

Any proceeds could provide Morrisons with greater financial firepower as it seeks to invest in prices, stores and its wider turnaround while contending with a substantial debt burden.

The potential deal comes after Lidl overtook Morrisons to become Britain’s fifth-largest supermarket earlier this year.

Lidl grew sales by 8.8 per cent in the 12 weeks to 17 May, taking its grocery market share to a record 8.6 per cent, according to Worldpanel by Numerator. Morrisons held an 8.3 per cent share after sales increased by 1.3 per cent.

Morrisons has disputed the comparison, arguing that the figures do not include sales generated through its extensive convenience estate.

The Bradford-based retailer has been working to streamline its operations and cut costs amid intense competition from Tesco, Sainsbury’s, Aldi and Lidl.

It reported a statutory pre-tax loss of £381m for the year to 26 October 2025, narrowing from £414m a year earlier, while net debt stood at £3.17bn. Revenue rose 3.2 per cent to £15.8bn.

The retailer was acquired by US private equity firm Clayton, Dubilier & Rice in a debt-funded takeover in 2021.

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