Supermarket Income REIT has continued its acquisition push following its recent equity raise with the purchase of two supermarkets – a Sainsbury’s in Washington, Tyne and Wear, and an Asda in Cwmbran, South Wales – for £55.1m, reflecting a combined net initial yield of 5.3%. The company has also announced an increase to its revolving credit facility to enable further investments.
The Washington supermarket, which was originally developed in 1977 and extensively refurbished by Sainsbury’s in 2011, comprises a 83,800 sq ft net sales area omnichannel supermarket, a 24-pump petrol filling station, and purpose-built online fulfilment docks. The Sainsbury’s store is being acquired with an unexpired lease term of 34 years, with seven-yearly, upwards only, RPI-linked rent reviews (subject to 4.0% cap and a 1.0% floor). The acquisition also includes two standalone quick service restaurant units operated by KFC and Tim Hortons located on the same site.
The Asda store in Cwmbran, which represents the group’s first Asda acquisition, comprises a 81,600 sq ft net sales area omnichannel supermarket located on a 4.4 acre site adjacent to Cwmbran Shopping Centre. Asda has been trading on the site since the 1970s, with the current store developed in 2015 which is currently undergoing further expansion to incorporate new purpose-built online fulfilment docks. The store will form a key part of Asda’s online fulfilment operations across the region. It is being acquired with an unexpired lease term of 10 years, with five-yearly, upwards only, open market rent reviews.
Debt financing update
The company has arranged a £136.5m increase to its revolving credit facility with Barclays and Royal Bank of Canada. Following the increase, the total size of the facility is £250.2m with a further £49.8m uncommitted accordion option, which is exercisable at any time over the term of the facility. The secured, interest-only, facility has a remaining term of two years and two further one-year extension options, with a margin of 1.5% above SONIA.
Ben Green, director of Atrato Capital, the investment adviser to Supermarket Income REIT, said: “These acquisitions are strong additions to Supermarket Income REIT’s growing portfolio of omnichannel stores and in combination are accretive to both the weighted average unexpired lease term and net initial yield of the company’s portfolio. In addition, the Asda acquisition provides further tenant diversification for the portfolio. The increased facility provides us with additional capacity as we deploy the proceeds of our recent equity raise.”
SUPR : Supermarket Income REIT continues acquisition push