Supermarket Income REIT has acquired a portfolio of Carrefour supermarkets in France – its first foray into markets outside the UK – through a sale and leaseback transaction for €75.3m, reflecting a net initial yield of 6.3%.
The portfolio comprises 17 omnichannel supermarkets, which are geographically diversified, with a weighting towards northern France, and operated under the Carrefour Market brand. The stores have an average gross internal area of 40,000 sq ft, and form a key part of Carrefour’s “Drive” online grocery fulfilment network within their respective catchments.
The portfolio has been acquired with a weighted average lease term of 12 years (with a tenant-only break option in year 10) with annual uncapped inflation-linked rent reviews. Carrefour is one of the largest grocers in the world, achieving total sales of €94bn in 2023. Carrefour operates across 30 countries, is the second largest grocer in France with a 20% market share and has a Baa1 credit rating from Moody’s.
Financing update
To fund the acquisition, the company has drawn €81.7m from its existing HSBC revolving credit facility having also increased the total size of the facility by £25m. The cost of this new euro denominated borrowing is 1.70% over EURIBOR, with the acquisition providing an attractive earnings spread over the long-term cost of the euro denominated borrowings. The company’s pro-forma net LTV following the acquisition is 37%.
Ben Green, director of Atrato Capital, the investment adviser to Supermarket Income REIT, said: “We are delighted to have completed this strategic sale and lease back transaction with Carrefour, one of the largest grocers in the world. The transaction represents the company’s first investment in the €284bn French grocery real estate market.
“This accretive transaction is complementary to our existing portfolio, providing further tenant diversification and continues our strategy of investing in the future model of grocery.”