Supermarket Inc REIT - Formation of joint venture to buy portfolio stake
Formation of Joint Venture TO ACQUIRE a stake in a SUPERMARKET portfolio
The Company's contribution to the JV is
The Portfolio consists of 26 Sainsbury's supermarkets. It is a geographically diverse high quality portfolio of stores with a
The Portfolio is funded by bonds, which mature in 2023. The rental income received from the Portfolio pays down the outstanding balance of the bonds to a final amount which will be repayable in 2023 by way of a refinancing or sale of the Portfolio.
The directors of the Company (the "Board") believe that the principal benefits of the Acquisition to shareholders are as follows:
· High quality portfolio: the JV investment will give the Company an interest in a large freehold high quality portfolio of predominantly omnichannel supermarkets with strong property fundamentals.
· Progressive valuation growth: the Board is targeting annualised NAV growth from the investment in excess of the Company's targeted annualised total shareholder return of 7-10%(1).
· Optimal capital structuring: the 50% JV investment interest is sized to minimise dividend cover dilution for the Company while maximising the total return to shareholders.
· Attractive future pipeline: the acquisition gives the JV a stake in a significant portfolio and the opportunity to increase that holding at the appropriate time.
1 There is no certainty that these illustrative projections will be achieved
"We are very pleased to have formed a strategic long term partnership with
"Our investment in this Sainsbury's property portfolio gives us an interest which we believe will be highly NAV accretive over the next three years. We will work closely with the co-owners, Sainsbury's and Aviva, to extend the leases and find a solution to the longer term ownership of the properties."
The Portfolio was created in 2000 through two sale and leaseback transactions which were funded by bonds issued under two securitisations
Out of the 26 stores in the Portfolio, 23 are omnichannel, offering physical shopping, click and collect and online home delivery. The majority of stores incorporate an Argos. The average store net sales area is approximately 61,000 sq.ft. with an average gross internal area of approximately 79,000 sq.ft. The average site size for each store is 7.3 acres. Approximately 60% of the Portfolio is located in
The Occupational Leases
Sainsbury's occupies the stores under the current occupational leases (the "Occupational Leases") and pays 100% of the rents. The Occupational Leases generate an annual rental income of
The income from the Occupational Leases services the interest and principal repayments of the bonds. The bonds amortise out of the rental income to a remaining outstanding debt amount of
At lease expiry in 2023, Sainsbury's has the option to extend the leases for a further term of 20 years at the higher of passing rent or open market rent, subject to upward-only, five yearly market rent reviews or to vacate the properties.
JV Investment Adviser and fees:
Full store list:
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Further information can be found on the Company's website or by contacting:
Stifel Nicolaus Europe Limited +44 (0)20 7710 7600
Tavistock +44 (0)20 7920 3150
NOTES TO EDITORS:
The Company provides investor with attractive, long-dated, secure, inflation-linked, growing income with the potential for capital appreciation over the longer term and targeting a 7% to 10% p.a total shareholder return over the medium term(1). The Company has increased its dividend target for the year ending
The Company's ordinary shares were admitted to trading on the Main Market of the
Further information is available on the Company's website www.supermarketincomereit.com
This information is provided by RNS
The company news service from the
This information is provided by RNS, the news service of the
Quick facts: Supermarket Income REIT PLC
Market Cap: £529.27 m
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