Supermarket Income REIT (SUPR) has continued its spending spree splashing out almost £100m on three UK supermarkets.
The company, which recently bought a portfolio of Carrefour stores in France and scaled up its Blue Owl joint venture with the £196m acquisition of 10 Asda stores, today announced the purchase of a trio of supermarkets in the UK for a total of £97.6m at an average net initial yield of 5.5%.
Tesco in Aylesbury
The largest of the new buys was a Tesco store in Aylesbury, bought for £56.3m at a 5.2% net initial yield. The store measures 110,000 sq ft on a 11.2-acre site and includes 15 home delivery vans, a Click & Collect facility and a petrol filling station.
Tesco has been trading from the site for over 40 years, and is subject to a triple-net lease that has an unexpired term of 11 years. The lease has annual RPI-linked rent reviews (subject to a 3% cap and 1% floor), which will change to CPI from 2028. Tesco currently pays rent of £26.90 per sq ft.
Sainsbury’s in Sale
SUPR has made the off-market acquisition of a 60,000 sq ft Sainsbury’s-let supermarket in Sale for £33.8m at a 5.9% net initial yield.
Sainsbury’s has been trading from the site for over 29 years and has a triple-net lease unexpired term of 16 years with annual RPI-linked rent reviews (subject to a 4% cap and 1.5% floor), with rent of £35.20 per sq ft.
Waitrose in Frimley
SUPR has paid £7.6m for the 30,000 sq ft store in Frimley at a 6.2% net initial yield. The supermarket, from which Waitrose has been operating for over 25 years, includes five home delivery vans and a Click & Collect facility.
A triple-net lease has an unexpired term of 11 years with five-yearly CPI-linked rent reviews (subject to a 3% cap and 1% floor), with rent of £15.90 per sq ft.
All three acquisitions were funded through the drawdown of SUPR’s existing debt facility. Following the completion of the transactions, the company’s pro-forma LTV is expected to be 43% with a portfolio WAULT of 12 years.
Rob Abraham, chief executive of SUPR, commented: “The acquisitions come at the end of a transformational year for SUPR, where we delivered on key strategic objectives, including lease renewals, internalisation, our debut bond issuance and changes to our listing. We established and scaled our strategic joint venture with Blue Owl Capital Managed Funds, enabling us to execute on an attractive pipeline of assets whilst receiving management fee income on stores transferred into the JV. We are on track to have recycled approximately £400m of capital this year into an exciting range of acquisitions across the various channels in our earnings accretive pipeline.
“We continue to see further opportunities ahead and look forward to continuing to grow the business as we cement our position as the leading landlord to grocery tenants.”
