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Lone Star Could Use £6B Asda Deal As Resi Development Play

Private equity firm Lone Star is planning to use the Asda supermarket chain as a major residential and office landbank if it wins the £6B battle for the company.

Lone Star is planning to utilise the air rights attached to Asda’s stores and turn the buildings into mixed-use schemes including flats and offices, The Times reported. It would provide the company with ready-made sites capable of holding thousands of new homes, the newspaper said.

Lone Star is not short of experience undertaking large-scale residential development in the UK. It owns Quintain, which is building the UK’s largest build-to-let scheme, with more than 5,000 apartments at Wembley Park in north London. Lone Star is weighing whether to sell Quintain for £3B.

In 2015, Meyer Bergman bought a portfolio of 14 stores with development rights from Tesco for £250M and used it to launch its Meyer Homes UK residential business. Tesco has developed flats above three of its London stores already, The Times reported.

Lone Star is vying with Apollo Global Management and a joint venture between EG Group and TDR Capital to buy Asda, which is being sold by U.S. supermarket giant Walmart.

Lone Star’s last major deal was the $1.9B purchase of Japanese hotel chain Unizo in April.

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