Supermarket Income REIT buys Scunthorpe Tesco Extra – Supermarket Income REIT has acquired a Tesco Extra supermarket in the north Lincolnshire town of Scunthorpe, England, from Legal and General Pensions Limited for GBP53 million (net of acquisition costs), reflecting a net initial yield of 5.1%.
Developed in 2002, the store totals 98,000 sq ft on an 8-acre site with more than 580 parking spaces, an 8-pump filling station and dedicated online fulfilment distribution docks. The store is strategically located to support online fulfilment given the excellent motorway and road connections. The store has a strong trading record on site and is situated adjacent to the Lincolnshire Lakes development, which consists of more than 6,000 new homes.
It is being acquired with an unexpired lease term of 22 years with annual, upward-only, RPI-linked rent reviews (subject to cap and floor) on fully repairing and insuring terms. The purchase has been funded from the proceeds of the GBP65 million equity placing on 25 May 2018.
Ben Green, Director of Atrato Capital, the Investment Adviser to Supermarket Income REIT, said: “We are delighted to continue our track record of rapidly deploying our capital in high-quality, omni-channel supermarkets. This store has an impressive trading record on site and plays an important role in Tesco’s online fulfilment network. This investment is a strong addition to our growing portfolio, increasing both the weighted average unexpired lease term and net initial yield of the company’s portfolio“.
[QD comment: this deal, which was funded with a £65m issue that took place earlier in the month, helps diversify the portfolio a bit in that SUPR now has five assets but four of these are leased to Tesco. Supermarket Income REIT is almost at the £200m level that it was hoping for at launch. Barring accidents, it could get much bigger still. Did you read our Citywire article on the fund?]
SUPR : Supermarket Income REIT buys Scunthorpe Tesco Extra