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Highlights
- Tesco, Newmarket store sold for £63.5 million, a 7.4% premium to its June 2024 valuation.
- Lease renewals on three Tesco stores increase WAULT to 12 years, with rents 35% above MSCI benchmarks.
- Acquisition of nine Carrefour supermarkets in France for €36.7 million, financed through a €39 million private placement.
Supermarket Income REIT plc (LSE:SUPR) has announced significant progress across its portfolio, reinforcing its strategy of generating secure, long-term, inflation-linked income through strategic asset management. The company’s recent actions include the sale of a key Tesco store, value-enhancing lease renewals, and expansion into the French market with a portfolio of Carrefour supermarkets.
Tesco, Newmarket Sale Unlocks Value
The company completed the sale of its Tesco, Newmarket store to Tesco plc for £63.5 million — a 7.4% premium to its 30 June 2024 valuation. The store’s passing rent at the time of disposal was £3.5 million. This transaction highlights the strategic value of Supermarket Income REIT’s assets to operators and provides the company with capital for reinvestment. The board is now exploring opportunities to recycle the proceeds into earnings-accretive investments for shareholders.
Lease Renewals Boost Portfolio Strength
Supermarket Income REIT successfully renegotiated leases on three of its shortest-leased Tesco stores, located in Bracknell, Bristol, and Thetford. The leases have been extended to 15 years with annual RPI-linked rent reviews (capped at 4%, floored at 0%). Rents were set at an average of 4% of store turnover — 35% above MSCI’s supermarket benchmark and 13% above the company’s valuation estimates.
These lease renewals increased the portfolio’s weighted average unexpired lease term (WAULT) from 11 to 12 years, with no significant lease expiries until 2032. The renewed agreements are expected to drive capital value growth, which will be reflected in the June 2025 valuation.
Carrefour Expansion in France
Continuing its international growth, the company acquired nine omnichannel Carrefour supermarkets in France for €36.7 million through a sale and leaseback deal with Carrefour. The portfolio, with an initial net yield of 6.8%, adds to Supermarket Income REIT’s existing French assets, bringing its total Carrefour store count to 26 — now representing around 5% of gross assets.
The stores, averaging 40,000 sq ft, are part of Carrefour’s "Drive" online grocery fulfillment network and are located in areas with low competition and strong trading histories. The assets come with a weighted average lease term of 12 years (with a tenant-only break in year 10) and uncapped inflation-linked rent reviews.
The acquisition was funded through a €39 million private placement with an institutional investor, issuing seven-year senior unsecured notes with a fixed 4.1% coupon. Following this placement and the Tesco sale, the company’s pro-forma loan-to-value (LTV) stands at 38%.
