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Supermarket Income REIT adds Tesco site and new £60m RCF

Supermarket Income REIT buys Sheffield Morrisons store

Supermarket Income REIT (SUPR), the UK supermarket REIT providing inflation-protected, long income from grocery property in the UK, has acquired Tesco Extra in Newmarket, Suffolk, from Standard Life Pooled Pension Property Fund for £61.0m, at a net initial yield of 4.6%.

Tesco has a long history of trading from this prominent 9-acre site which was originally developed in the 1980s and completely rebuilt in 2016.

The site comprises a 68,000 sq ft net sales area Tesco Extra with a 12-pump petrol filling station, 654 parking spaces and purpose-built online fulfilment distribution docks, supporting Tesco’s online grocery business across the region. It is being acquired with an unexpired lease term of 16 years with annual, upward-only, RPI-linked rent reviews (subject to a 5% cap and 0% floor).

SUPR announces new £60m RCF

SUPR also announced the arrangement of a new revolving credit facility (RCF) of £60.0m with Wells Fargo. This secured, interest-only, RCF has an initial five-year term and two further one-year extension options. Once drawn, the RCF has a margin of 2.0% above 3-month Libor which is currently equivalent to a total cost of c.2.1%. The RCF also includes a £100m uncommitted accordion option, exercisable at any time over the term of the facility.

Commenting on the two announcements made today, Ben Green, director of Atrato Capital, SUPR’s manager, said: “This modern Tesco Extra is a great addition to our growing portfolio of omnichannel stores. The property has attractive lease terms, strong fundamentals and is a key online grocery fulfilment hub for Tesco supporting both home delivery and click and collect. We are also delighted to have secured Wells Fargo as a new lender to Supermarket Income REIT. Our new facility provides us with very competitively priced, seven-year funding with room to grow to support the Company’s future investment requirements”.

SUPR: Supermarket Income REIT adds Tesco site and new £60m RCF

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