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Investment Trust Insider on Supermarket Income REIT

05
2018
April

Investment Trust Insider on Supermarket Income REIT

James Carthew: Supermarket Inc should go down main aisle

Last summer Supermarket Income (SUPR) presented investors with a new alternative in their search for predictable, inflation-linked yields. Since then the real estate investment trust (Reit) has announced quarterly dividends of 1.375p, equating to a 5.5% yield on its £1 issue price, and is investing in assets that often come with rents linked to the retail prices index (RPI).

Its prospectus published in June said the company was looking to raise £200 million as it had a pipeline of acquisitions lined up to deploy all of that money and more. In the event, the issue raked in £100 million. It was a busy time for new issues and there may have been an element of roadshow fatigue setting in by the time many investors got to meet the team.

One other problem, though, could have been that the fund listed on the London Stock Exchange’s specialist funds market (SFM). It seems as though a number of investment platforms now actively prevent individuals from buying funds on the SFM. The LSE advises, but does not mandate, that such funds are not considered suitable for distribution to retail investors, a restriction that puts a spanner in the works in terms of fundraising and may have restricted the appetite for SUPR.

The reason why the Reit chose to go down the SFM route is likely to have been the degree of concentration of its portfolio. This was perhaps inevitable given that the price tags for the stores are in the tens of millions. In the event, this was exacerbated by it failing to hit its target.

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