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Highlights
- Supermarket Income REIT completed the acquisition of three UK supermarkets for GBP 97.6 million at an average net initial yield of 5.5%.
- The transaction increases exposure to investment-grade tenants to 75% and extends portfolio WAULT to 12 years.
- The acquisitions were funded through existing debt facilities, with pro-forma LTV expected to be 43%.
Supermarket Income REIT plc (LSE:SUPR) has completed the acquisition of three UK supermarket assets for a total consideration of GBP 97.6 million, marking a further expansion of its grocery-led property portfolio. The transaction includes stores operated by Tesco, Sainsbury’s and Waitrose, with the assets secured on long-term, inflation-linked leases and funded through the company’s existing debt facility.
Portfolio Expansion Anchored by National Grocers
The newly acquired supermarkets are located in Aylesbury, Sale and Frimley and are operated by three of the UK’s most established grocery retailers. The combined purchase price of GBP 97.6 million equates to an average net initial yield of 5.5%. Each asset has been selected to align with Supermarket Income REIT’s investment focus on large-format, omnichannel supermarkets with long trading histories.
Following completion of these acquisitions and other pipeline transactions, the company expects its pro-forma loan-to-value ratio to be around 43%. The portfolio weighted average unexpired lease term is projected to be 12 years, while exposure to investment-grade tenants has increased to 75%.
Tesco Store in Aylesbury Adds Scale
The largest acquisition within the transaction is a Tesco supermarket in Aylesbury, purchased for GBP 56.3 million excluding acquisition costs. The asset delivers a net initial yield of 5.2% and sits on an 11.2-acre site comprising a 110,000 square foot store, supported by a petrol filling station, Click & Collect facilities and 15 home delivery vans.
Tesco has traded from the site for more than four decades. The property is held on a triple-net lease with 11 years remaining, featuring annual RPI-linked rent reviews subject to a 3% cap and 1% floor. The agreed rent stands at GBP 26.9 per square foot following a lease renewal completed four years ago.
Sainsbury’s Sale Acquired Off-Market
The Sainsbury’s supermarket in Sale was acquired off-market for GBP 33.8 million, excluding acquisition costs, at a net initial yield of 5.9%. The store occupies a 4.4-acre site and provides approximately 60,000 square feet of retail space alongside more than 350 parking spaces.
Sainsbury’s has operated from the location for over 29 years. The triple-net lease has an unexpired term of 16 years and includes annual RPI-linked rent reviews with a 4% cap and 1.5% floor. The rent is set at GBP 35.2 per square foot.
Waitrose in Frimley Completes the Trio
The third acquisition is a Waitrose supermarket in Frimley, purchased for GBP 7.6 million excluding acquisition costs at a net initial yield of 6.2%. The 1.3-acre site includes a 30,000 square foot store with Click & Collect facilities and five home delivery vans.
Waitrose has traded at the site for more than 25 years. The asset is held on a triple-net lease with 11 years remaining, incorporating five-yearly CPI-linked rent reviews subject to a 3% cap and 1% floor. The passing rent is GBP 15.9 per square foot.
