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Morrisons sells distribution centre in Kemsley, Sittingbourne, for £97.8m and will pay big rent of £5.4m a year to operate there

18 June 2014
by Chris Price

Struggling supermarket Morrisons has sold its distribution centre in Kent to a real estate investment company for £97.8m.

The depot in Kemsley, near Sittingbourne, will be immediately leased back to the chain on a 25-year agreement at an annual rent of £5.4m a year.

The sale to Tritax Big Box REIT comes a day after the company announced 2,600 job losses across the country.

Morrisons' national distribution centre near Sittingbourne

Morrisons' national distribution centre near Sittingbourne

The UK’s fourth largest supermarket has been considering selling much of its property portfolio to appease investors, who are unhappy at its loss of market share to discount retailers like Aldi and Lidl.

The company is under pressure to reduce costs to fund plans for £1bn in price cuts and product improvements over the next three years.

“One of our objectives is to manage our properties more actively than we have historically which involves monetising a small number of assets including our regional distribution centre in Sittingbourne...” - Morrisons' Terry Hartwell

The chain racked up an annual loss of £176m in the year to February and saw a 7.1% decline in quarterly sales over Easter, prompting price cuts on 1,200 items by an average of 17% last month.

Tritax bought the Kemsley site with a £53.8m loan from Barclays.

The distribution facility is run by ADR Network, which has carried out operations for Morrisons there for more than five years.

Morrisons group property director Terry Hartwell: “In addition to being one of the country’s leading grocers and food producers, Morrisons is also the owner of a significant amount of real estate in the UK.

“As highlighted in our latest preliminary results, one of our objectives is to manage our properties more actively than we have historically which involves monetising a small number of assets including our regional distribution centre in Sittingbourne.”

The warehouse was originally developed for Morrisons in 2009 and covers 49.8 acres. It serves stores ranging from the Isle of Wight to Ipswich. There are also three wind turbines on the site.

The opening of the long-awaited Morrisons store for Sheppey

The opening of the long-awaited Morrisons store for Sheppey

Tritax partner Colin Godfrey said: “We are delighted to be acquiring this state of the art facility in a strategically important South East location for both chilled and ambient general merchandise, and we look forward to developing our relationship with Morrison’s, one of the UK’s leading supermarket brands.”

Morrisons employs more than 126,000 staff and has 511 supermarkets and 117 convenience stores across the UK.

In April, the chain ditched plans to build a new shop in Ashford but announced proposals to convert a former amusements in Whitstable High Street.

It is also seeking planning permission for a small site in Gravesend and opened a store at Neats Court on Sheppey in September.

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