NCP's collapse exposes the hidden risks of supermarket leaseback deals
UK car park operator NCP collapsed into administration in January 2023 after years of financial strain. The company's troubles highlight the risks of long-term leaseback deals, which left it with a £1.3bn rent burden. Meanwhile, supermarkets like Tesco, Sainsbury's and Asda have increasingly turned to similar agreements, raising concerns about their financial stability. NCP's financial problems began in 2002 when private equity firm Cinven took over. To fund the deal, NCP sold and leased back £600mn worth of car parks. At the time, its minimum future rent bill stood at £45mn—but by 2023, this had ballooned to £1.3bn.
Despite two decades under Cinven's ownership, NCP's revenues remained stagnant, matching 2002 levels at £187mn in 2023. Changing urban habits—like remote work, ride-hailing apps, and congestion charges—cut demand for city centre parking, pushing the company toward administration. Supermarkets, however, have embraced leaseback deals at record levels. In early 2026, UK grocery chains completed over £1.2bn in such transactions—far surpassing the £850mn total for 2025. Tesco led with £650mn, followed by Sainsbury's (£320mn) and Asda (£180mn). Even earlier, in 2023's first quarter, supermarkets struck £400mn in leaseback agreements. Asda and Morrisons have been particularly active. Morrisons owns about 80% of its stores, while Asda leases roughly 40% of its locations. Yet these deals carry risks: in December 2022, S&P downgraded Asda's credit rating deeper into junk status, warning of slow recovery and leaseback exposure.
NCP's failure serves as a warning about the dangers of long-term lease commitments. Supermarkets now face similar pressures, with record-high leaseback deals raising questions about their future financial flexibility. The strategy may offer short-term cash but risks creating heavy, inescapable costs down the line.
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