Asda has kicked off a review of its £8.6bn property estate as its owners explore options to reduce the supermarket’s costly debt.

The billionaire Issa brothers, flanked by private equity backers TDR Capital, are targeting the sale and leaseback of Asda’s supermarket estate to combat soaring interest bills.

Market sources said property experts have been called in to assess the prospects for the supermarket’s estate. Freehold properties were valued at £8.6bn, according to Asda's 2021 annual report. Asda Group is yet to file its 2022 annual report with Companies House.

It is understood that Asda’s owners expect to retain a sizable “underpin” of freehold properties even if many of its sites are sold to investors and then leased back.

The Issas and TDR shocked the City two years ago by acquiring Asda in a £6.8bn debt-fuelled deal in which they injected only £800m in equity.

Since then, the cost of living crisis and rising interest rates have piled pressure on the business and paying down debt has become a priority in recent months.

However, a sale and leaseback of Asda's properties could solve one problem but risk another by reducing interest payments in exchange for higher rent.

It emerged in January that one option under review was a potential merger of Asda with the UK arm of EG Group, the petrol station business that made the Issas’ fortune. Such a move would be likely to attract close scrutiny from competition regulators, however.

Discussions over ways to reduce Asda’s interest payments come as the Issas also seek to ease the burden of their debt-fuelled dealmaking on EG Group itself.

Lenders were told last week that discussions to sell-off parts of the company were “well advanced”, City sources said. EG told bondholders it wants to raise $2.2bn (£1.83bn) on top of the $1.5bn sale and leaseback of its US property estate it announced.

Only once the deals are completed will the company have a “sustainable” level of debt, EG told investors.

A spokesman for EG Group said: “We are pleased to have various options available and consider the merits of each to underpin our long-term strategy.”

“EG Group continues to make good progress across all areas of its business and this week announced a highly resilient financial performance in 2022 – despite macro-economic headwinds.”

Asda declined to comment.