Supermarket Income REIT (SUPR) has provided an update to the market in which it:
- reaffirms its commitment to pay its third quarterly dividend;
- confirms it received 100% of the expected rent for the quarter ended March 2020;
- announces positive results from two rent reviews; and
- provides a general update in regards to the impact of covid-19.
Positive results from two rent reviews
SUPR says that it has agreed rental increases from the two rent reviews due in the quarter. Specifically:
- The review for the Tesco superstore in Lime Trees, Bristol, has resulted in a Retail Prices Index (RPI) increase of 2.2% from March 2020. The rent has increased from £1.58 million to £1.62 million.
- The review at the Morrisons supermarket in Hillsborough, Sheffield, has resulted in an increase based on five years of RPI of 13.0% from October 2019. The rent has increased from £2.54 million to £2.87 million per annum.
Reflecting the outcome of both reviews, SUPR says that the total rent from its portfolio has therefore increased from £28.03 million to £28.4 million. Furthermore, SUPR has confirmed that it received 100% of the expected March 2020 quarterly rental payments.
Reaffirmation of the dividend
Reflecting the outcome of the recent reviews, and full rental collection, SUPR has reaffirmed its intention to pay its third-quarter interim dividend “in line with expectations and as per the normal timetable”. The third-quarter dividend is due to be announced on 8 April 2020.
Corporate update – covid-19
SUPR says that, while it is too early to fully understand the long-term implications of the ongoing health crisis, it has a robust balance sheet and is in a strong position to continue operating as usual despite the wider uncertainty. After the payment of the third-quarter dividend, discussed above, SUPR expects:
- A net loan-to-value ratio (LTV) of 37.5% versus an LTV covenant of 60.0%
- Interest cover of 6.8x versus a debt covenant of 2.0x
- Cash balances of £32 million
Ongoing dialogue with tenants
SUPR says that all of its supermarkets continue to operate as normal. However, the Company remains in regular dialogue with its tenants and partners and it says it will act in accordance with all recommendations given by relevant authorities.