Supermarket Income REIT (SUPR) has reported impressive full-year results, posting net asset value (NAV) total return of 12.8% for the year to 30 June 2021.
The uplift in NAV (EPRA net tangible assets – NTA) of 7% to 108p per share was primarily due to an 8.5% like-for-like growth in the value of its property portfolio.
SUPR’s portfolio was valued at £1.15bn, an increase of £609.0m following valuation growth of £67.8m and new acquisitions of £541.2m.
New acquisitions in the year (20 in total following two capital raises totalling £353m) meant annualised passing rent increased 101% to £57.8m and EPRA earnings growing 119% to £36.8m.
EPRA earnings per share was up 12% to 5.6p. The group distributed dividends in the year of 5.9p (up from 5.8p the year previously). Its dividend target for full-year 2022 has been increased to 5.94p.
The group’s portfolio has a weighted average unexpired lease term (WAULT) of 15 years and a net initial yield (NIY) of 4.7% (which compressed from 5.0% a year before).
The portfolio has a net loan to value of 34.0%, with a weighted cost of debt of 1.9%.
Post year-end, the group has acquired five further supermarkets for £94.6m, at a blended NIY of 4.8%. It has also agreed £91.3m of new debt financing at a weighted average cost of 1.55% and a weighted average term of five years. SUPR has £128m of remaining debt capacity through committed and uncommitted accordion options on debt facilities.
The grocery sector
The grocery sector has performed well during the pandemic, with sales up considerably. When comparing 2021 sales to 2019, which was the last full pre-Covid year, the 12-week period up to 12 July 2021 sales were up £3bn or 11% on the same period in 2019 despite the broad re-opening of the economy. SUPR said it believes that this “shows that we are starting to see more persistent changes in consumer habits and the impact they have on the grocery sector”.
Online grocery market share has grown to 13% of total UK grocery sales, well above 2019 levels and SUPR said this demonstrated that “the step change in online utilisation has become ingrained in consumer behaviour”. Omnichannel supermarkets (traditional stores that double up as picking centres for online orders) now fulfil 80% of all online grocery orders. The vast majority of SUPR’s portfolio is made up of omnichannel supermarkets.
SUPR : Supermarket Income REIT posts 12.8% NAV total return