Morrisons, the UK’s fourth-largest supermarket group, is taking the first step to extract value from its vast property portfolio, but is not yet considering a full-scale sale and leaseback, chairman Sir Ken Morrison said today

The group is in talks that may lead to it entering into a property partnership for some of its investment properties, which analysts estimate are worth as much as £7.5bn.

'We are investigating the options open to us because we have a big portfolio of property which we need to know how best to use,' Morrison said, after announcing a strong set of annual results.

'It doesn't indicate we are about to do anything but we're about to prepare ourselves so that if we wanted to do something, we would not be handicapped.'

Morrison said the 25 properties that could be involved in the partnership adjoin Morrisons' stores and provide it with rental income.

'A property partner in that aspect could help us by maybe increasing the profitability of these rentals,' said chief executive Marc Bolland. 'This is not an announced step to do but an announcement to have a serious look at it.'

Morrison ruled out the prospect of a large property disposal programme. 'We've no immediate plans to do anything of that nature,' he said.

Analysts were pleasantly surprised by news of the property partnership. 'The initial "toe in the water" may be small, but this should be well received by the market,' Numis Securities analysts said.

In the year to 4 February, Morrisons reported a six-fold increase in pretax profits of £331m and unveiled a £450m makeover. It will extend its recovery from a tough two years following its purchase of rival Safeway.

It said that following a strategic review, it planned to position itself as 'the food specialist for everyone' and drop its previous slogan of 'more reasons to shop at Morrisons'.