Supermarket Income REIT sees multiple opportunities – Supermarket Income REIT has published its first set of results, covering the 13 month period from incorporation to the end of June 2018. Highlights are:
- The IPO in July 2017 raised gross proceeds of GBP100 million at an issue price of 100 pence per ordinary share. SUPR’s shares were admitted to trading on the London Stock Exchange on 21 July 2017.
- Two follow-on equity fundraisings in November 2017 and May 2018, raised an additional GBP85 million in total gross proceeds, both issues were oversubscribed.
- Following the IPO and each subsequent fundraising, the company was able to fully deploy the proceeds including leverage within 6 weeks.
- During the period, acquired five supermarket assets in the UK that operate as physical supermarkets and as online fulfilment centres.
- The investment properties benefit from highly attractive terms:
- 19 years weighted average unexpired lease term
- strong tenant covenants of Tesco and Sainsbury’s
- upward-only, RPI-linked rent reviews
- annualised rental income of GBP13.7 million in the financial year
- average rental increases of 3.6% for the Period
- all assets acquired off market
- Investment properties independently valued on 30 June 2018 at GBP264.9 million, representing an increase of 4.1% above the aggregate acquisition price (excluding acquisition costs) generating 4.9% weighted average net initial yield.
- Net loan to value ratio of 32.4%, with a cost of debt of 2.4%, as at 30 June 2018.
- Four quarterly dividends declared for the period totalled 5.5 pence per ordinary share, achieving their IPO target.
- Total shareholder return for the Period was 8.0%.
- EPRA Net Asset Value per ordinary share of 96 pence as at 30 June 2018.
Post balance sheet events
- Acquisition of a sixth supermarket, a Morrisons store in Sheffield, for GBP51.7 million (net of acquisition costs), reflecting a net initial yield of 4.9%.
- GBP52million debt facility provided by Bayerische Landesbank, fixed at 2.55% for the five year term of the facility.
- Increased dividend target:
- For the period September to December 2018, and thereafter, an increase in the quarterly dividend of 3.2% to 1.419 pence per share
- For the FY 2018/19, 5.63 pence per share
Nick Hewson, chairman, commented: “We have rapidly built our portfolio of supermarket property assets, precisely in line with the business plan outlined at IPO and have successfully delivered our 5.5 pence per ordinary share dividend target. Our high-quality portfolio produces attractive inflation linked income for shareholders together with the potential for long term capital returns. Supermarket Income REIT is committed to providing investors with stable, long-term, inflation-protected income, supported by a compelling real estate and pricing opportunity.”
The statement goes on to say “We remain confident of delivering strong returns for our shareholders through a stable and growing income stream with the potential for capital appreciation. The board and the investment manager continue to see multiple opportunities in the market which meet the company’s investment objectives whilst potentially adding further geographical, covenant and income diversification to the portfolio. These opportunities are still at an early stage and remain subject to the investment adviser’s and company’s stringent due diligence procedures as well as agreement around key terms including pricing. If these opportunities reach a more advanced stage, the board will consider possible ways to fund these accretive purchases including raising new equity pursuant to its existing share issuance programme.”
SUPR : Supermarket Income REIT sees multiple opportunities