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.

() raised its dividend target after its directly-owned property portfolio soared in value over the past year.

The dividend for the year to June just ended increased 2% to 5.9p but the target for this year was increased to 5.94p per share to reflect the rising rent roll.

Supermarket Income specialises in properties let to the UK grocery majors and especially those that have online fulfilment potential.

An independent valuation puts the worth of its portfolio at GBP1.15bn at the end of June 2021, an increase of GBP609mln over the year and reflecting GBP541mln of additions and a GBP68mln increase in value.

() 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.

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.

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.

continues to be driven along by strong sector tailwinds says Berenberg, which reiterated its share price of 135p and ‘buy’ recommendation on the grocery chain landlord.

The broker expects the recent impressive rate of growth to slow but sees value in the company’s high-quality, omnichannel portfolio of stores, with plenty of asset management potential, including sustainability initiatives.

SUPR trades at a 3.1% premium to the wider UK real estate sector and yields 4.9% but that leaves plenty more to come from the shares, concludes the broker.

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.