Supermarket Income REIT has announced its intention to raise £175m through a placing.
The issue price of 121p is a discount of 4.3% to last night’s closing price of 126.5p and a 7.1% premium to its last reported EPRA NTA of 113p on 31 December 2021.
The company’s investment adviser, Atrato Capital, has identified a near-term acquisition pipeline worth £270m – £150m of which are currently under exclusivity and an additional £120m in advanced due diligence.
The £175m target issue, together with associated debt financing, should enable the company to purchase some of the target assets and if the issue size is exceeded, the company will consider acquiring additional assets in its wider £440m pipeline.
The company and investment adviser have a strong track record of successfully raising equity and deploying the proceeds within six months. Its last equity raise, in October 2021, was oversubscribed at £200m.
Since IPO in July 2017, the investment adviser has deployed over £1.4bn of capital into a portfolio consisting of 41 supermarket assets and an indirect interest in a further 26 Sainsbury’s supermarkets. Following the group’s migration of its listing to the premium segment in February, it expects to be eligible for inclusion in the FTSE UK and FTSE EPRA NAREIT Index Series in the second quarter 2022 index review.
Nick Hewson, chairman of the company, said: “Omnichannel supermarket stores continue to play a pivotal role within the UK’s grocery infrastructure and present a safe haven for investors seeking a source of secure, predominantly inflation-protected income in the current environment of rising inflationary pressures and wider geopolitical uncertainty.
“Currently, 85% of the company’s existing rental income is directly linked to growth in inflation, and historically there has been a high degree of correlation between inflation and food prices, which means that the ability of our grocer tenants to pay the rental income remains sustainable in the long term.
“Additionally, our focus on acquiring omnichannel stores allows us to benefit from both in-store and online grocery shopping, driven by the growth of working from home which has boosted the entire grocery sector.
“Meanwhile the Investment Adviser, with its extensive network and strong track record, remains able to unlock attractive pipeline opportunities for investment so as to ensure that we maintain our record of deploying the proceeds of equity raises into high quality omnichannel stores within six months.”
SUPR : Supermarket Income REIT aims to raise £175m in placing