Supermarket Income REIT gets tailwind from buoyant grocery sector

Supermarket Income REIT plc is a real estate investment trust dedicated to investing in supermarket property forming a key part of the future model of UK grocery.

The company provide investors with long-dated, secure, inflation-linked income with capital appreciation potential over the longer term.

() has acquired six supermarkets for a total purchase price of GBP113.1mln, including Marks & Spencer as a tenant for the first time.

The purchases consist of a Tesco in Prescot, two Morrisons in Durham and Cumbria, an in Oldham and an and M&S Foodhall site in Liverpool.

Excluding acquisition costs, the sites are being acquired on a combined net initial yield of 4.6% and from several vendors including Land Securities, a Janus Henderson fund, London Metric Property plus others.

Ben Green, director of Atrato Capital the investment adviser to Supermarket Income, said: “These acquisitions provide geographic and tenant diversification, with the purchase of our first M&S Foodhall, as well as exposure to a number of high-quality omnichannel supermarket assets.

() increased its borrowing headroom via a series of agreements.

It arranged a GBP61.3mln expansion to its revolving credit facility (RCF) with Wells Fargo, added GBP20mln to its secured term loan with Deka and agreed an one-year extension alongside a GBP10mln hike to its RCF with HSBC.

() announced () exercised a purchase option to buy back 13 stores.

They are part of a joint venture portfolio the real investment trust holds with British Airways Pension Trustees Limited.

Negotiating rents has been one of the key issues during the coronavirus crisis: most landlords have been accepting rent deferrals or offering discounts altogether to help their tenants.

But () has stood out after receiving all of its rents for March even before the expected deadline.

Peel Hunt has restated its ‘buy’ rating and 125p price target for shares in () after the property investment group negotiated further headroom with a trio of debt providers.

In a note to clients, the City broker said: “The company has only spent around GBP63mln since the GBP153mln equity placing in March.

“Therefore, combined with the recent news that Sainsbury’s has exercised an option to acquire 13 stores from the company’s JV and today’s announcement, the company now has significant capital for acquisitions.”

Supermarket Income REIT’s () Ben Green talks to Proactive London’ Katie Pilbeam about the reasons behind the recent rise in UK inflation.

The annual UK inflation rate more than doubled in April, as a rise in energy and clothing costs drove prices higher.

He says for investors they are wondering if this is temporary or sustained and how to protect their portfolios.