Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) has achieved a steady state following the unwinding of its Sainsbury’s Reversion Portfolio, Stifel analysts surmised following the investment vehicle’s Wednesday earnings call.
Analysts stated that “proceeds from the JV have been reinvested into a combination of earnings-accretive acquisitions and debt reduction such that we remain confident that next year's targeted 6.06p dividend will again be covered by earnings without the company having to make further acquisitions”.
Supermarket REIT paid out a 6p dividend for the full year, which Stifel noted was “within a hair’s breadth of full cover by recurring earnings”.
The REIT’s balance sheet is also stable at a 35% loan-to-value ratio, combined with £175 million in undrawn debt facilities.
Stifel noted that Supermarket REIT’s 8% dividend yield is far better than the UK REIT average of 5.6%, and though the group isn’t immune to macroeconomic uncertainty, its 20% share price discount to net tangible assets presents “compelling value and strong income investment case”.
Stifel has a 'buy' rating on Supermarket REIT stock with a 115p target price against a 75p publication price.