Supermarket Income REIT plc (LON:SUPR, JSE: SRI) has announced that it has completed the acquisition of three supermarkets in the UK for a total purchase price of £97.6 million, at an average net initial yield of 5.5%1.
These acquisitions, comprising well-established stores with long trading histories, have been carefully selected to align with SUPR’s core business strategy and drive further earnings accretion.
Tesco, Aylesbury
· Purchase price of £56.3 million (excluding acquisition costs) at a 5.2%1 net initial yield
· 11.2-acre site comprising 110,000 sq. ft. supermarket with 15 home delivery vans, a Click & Collect facility and a petrol filling station
· Tesco has been trading from this site for over 40 years
· Triple-net lease unexpired term of 11 years with annual RPI-linked rent reviews2 (subject to a 3% cap and 1% floor)
· Strong trading store with an affordable rent of £26.9 per sq. ft., following a lease renewal four years ago
Sainsbury’s, Sale
· Off-market acquisition for £33.8 million (excluding acquisition costs) at a 5.9%1 net initial yield
· 4.4-acre site comprising 60,000 sq. ft. supermarket with over 350 car park spaces
· Sainsbury’s has been trading from the site for over 29 years
· Triple-net lease unexpired term of 16 years with annual RPI-linked rent reviews (subject to a 4% cap and 1.5% floor), with rent of £35.2 per sq. ft.
Waitrose, Frimley
· Purchase price of £7.6 million (excluding acquisition costs) at a 6.2%1 net initial yield
· 1.3-acre site comprising 30,000 sq. ft. supermarket with 5 home delivery vans and a Click & Collect facility
· Waitrose has been operating at the site for over 25 years
· Triple-net lease unexpired term of 11 years with 5-yearly CPI-linked rent reviews (subject to a 3% cap and 1% floor), with rent of £15.9 per sq. ft.
These acquisitions have been funded through the drawdown of the Company’s existing debt facility. Following the completion of pipeline transactions, the Company’s pro-forma LTV is expected to be 43% with a portfolio WAULT of 12 years, and exposure to investment grade tenants has increased to 75%3.
Rob Abraham, CEO of Supermarket Income REIT, commented:
“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 £400 million of capital this year into an exciting range of acquisitions across the various channels in our earnings accretive pipeline.
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.”
1 NIY assuming respective standard purchaser’s cost and including vendor rent top-ups where applicable
2 RPI until 2028, CPI thereafter
3 Assumes the Company’s five stores are transferred to the JV as previously announced, following completion of due diligence; this transaction is included within the £400 million capital recycling total
