Supermarket Income REIT plc (LON:SUPR) has announced that it is has completed £40.9 million of acquisitions that are accretive to earnings and WAULT across two transactions at an average net initial yield of 6.4%1.
Following these transactions the Company has now redeployed £99.8 million of the proceeds of the Company’s strategic joint venture with funds managed by Blue Owl Capital, which was announced in April 2025, at a net initial yield of 6.7%.
Tesco, Craigavon acquisition
The acquisition of this upper quartile performing food store in Craigavon, Northern Ireland, at a purchase price of £25.6 million (excluding acquisition costs) reflects an attractive net initial yield of 6.5%2. The 8.6-acre site comprises a 130,000 sq ft gross internal area omnichannel supermarket and a petrol filling station and is the primary omnichannel Tesco store within a 25-minute drivetime of the site. It serves as an online fulfilment hub with 12 home delivery vans, as well as offering Click & Collect services. The unexpired term of the triple-net lease is 15 years with five-yearly, CPI-linked rent reviews (annually compounded, subject to a 4% cap and 0% floor), with a highly affordable rent of £12.70 per sq. ft.
Acquisition of a portfolio of 10 Sainsbury’s convenience stores marks entry into convenience-grocery
The Company has also completed the acquisition of 10 Sainsbury’s convenience stores at a purchase price of £15.3 million (excluding acquisition costs), reflecting a net initial yield of 6.1%3. The stores are being acquired from Sainsbury’s with attractive 15-year triple-net leases that benefit from five-yearly, CPI-linked rent reviews (annually compounded, subject to a 3% cap and 1% floor).
The acquisition of these strong trading stores represents SUPR’s first investment in convenience grocery. These strongly performing stores have an average gross internal area of 5,800 sq ft and are situated in densely populated town-centre locations across the UK, with strong footfall and visibility.
Locations of the Sainsbury’s assets:
· Boston Manor
· Bristol
· Doncaster
· Edinburgh
· Melbourne
· Nottingham
· Royal Leamington Spa
· Sheffield
· Solihull
· South Benfleet
The Company increasingly sees opportunity within the small format grocery space, where strong trading stores can be acquired at attractive prices and retain the key triple-net, inflation-linked fundamentals of the adjacent large format grocery sector.
Following these acquisitions, the Company’s pro-forma LTV is 36%, with the portfolio WAULT at 11 years.
Rob Abraham, CEO of Supermarket Income REIT, commented:
“We continue to make good progress with redeploying the proceeds from our joint venture into income accretive opportunities. We have a strong pipeline of large format omnichannel supermarkets, whilst we also see attractive relative value in smaller format convenience stores as demonstrated by our acquisition from Sainsbury’s. Our relationship-led model and sector specialism continues to set us apart in the market, enabling us to unlock these unique opportunities and strategically scale the business.”
Notes
1 NIY assuming respective standard purchaser’s costs
2 NIY assuming standard purchaser’s costs of 6.8%
3 NIY assuming standard purchaser’s costs of 7.8%
