Register to get 2 free articles
Reveal the article below by registering for our email newsletter.
Want unlimited access? View Plans
Already have an account? Sign in
Supermarket Income REIT (SUPR) has announced its acquisition of three UK supermarkets for a total of £97.6m as it continues to expand its portfolio of grocery-led assets.
The London-listed landlord said the purchases, which cover stores operated by Tesco, Sainsbury’s and Waitrose, were completed at an average net initial yield of 5.5%. The assets were funded through the drawdown of the company’s existing debt facility.
The largest acquisition is a Tesco supermarket in Aylesbury, bought for £56.3m. The 110,000 sq ft store sits on an 11.2-acre site that includes a petrol filling station, home delivery facilities and click-and-collect. Tesco has traded from the site for more than 40 years and holds an 11-year triple-net lease with annual RPI-linked rent reviews, subject to caps and floors.
Supermarket Income REIT also acquired a Sainsbury’s store in Sale, Greater Manchester, for £33.8m in an off-market transaction. The 60,000 sq ft supermarket occupies a 4.4-acre site with more than 350 car parking spaces. Sainsbury’s has operated at the location for more than 29 years and has 16 years remaining on a triple-net lease with RPI-linked annual rent reviews.
The third purchase is a Waitrose supermarket in Frimley, Surrey, acquired for £7.6m. The 30,000 sq ft store has been trading for over 25 years and is let on an 11-year triple-net lease with five-yearly CPI-linked rent reviews.
Following completion of the acquisitions and other pipeline transactions, the company expects its loan-to-value ratio to be 43% and its portfolio weighted average unexpired lease term to be 12 years. Exposure to investment-grade tenants is expected to rise to 75%.
Rob Abraham, chief executive of SUPR, said: “The acquisitions come at the end of a transformational year for SUPR, where we delivered on key strategic objectives, including lease renewals, internalisation, our debut bond issuance and changes to our listing.
“We established and scaled our strategic joint venture with Blue Owl Capital Managed Funds, enabling us to execute on an attractive pipeline of assets whilst receiving management fee income on stores transferred into the JV. We are on track to have recycled approximately £400m of capital this year into an exciting range of acquisitions across the various channels in our earnings accretive pipeline.”
He added: “We continue to see further opportunities ahead and look forward to continuing to grow the business as we cement our position as the leading landlord to grocery tenants.”
