Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) delivered a robust set of interim results on Wednesday, supported by a growing rent roll and a resilient groceries sector.
The London-listed REIT increased annualised passing rents by 10% to £104.7 million, up from £95.5 million in the previous year’s interims, driven by acquisitions and contractual rental uplifts.
Operating Profit saw an 18% growth to £45 million, with adjusted earnings remaining stable at £36.3 million.
Reported net assets on the books stood at £1.125 billion as of 31 December 2023, decreasing by 8% from £1.218 billion on 30 June 2023.
Supermarket REIT decided to keep its interim dividend at a consistent 3p.
During the period, Supermarket REIT strategically acquired two supermarket properties at a net initial yield (NIY) of 6.5% for a total consideration of £36.4 million.
The company is on track to meet its full-year 2024 dividend target of 6.06 pence per share, underpinned by the grocery sector's continued structural growth and the portfolio's robust performance.
Chair Nick Hewson discussed: "The UK grocery sector continues to demonstrate strong resilience to the challenging macroeconomic environment. Our tenants continue to grow, strengthening their financial and operational performance by putting omnichannel supermarkets at the heart of their operations.
“We remain focused on our investment strategy of acquiring and managing a high-quality portfolio of omnichannel supermarkets, which are critical to our tenants, giving us exposure to the largest and fastest growing segment of the grocery market.”
Hewson noted that a record £2.1 billion was invested into UK supermarket property in 2023, “highlighting the strong appeal of the asset class and the attractiveness of current asset values”.
Although UK property valuations continue to be impacted by the uncertain economic backdrop, interest rates are normalising and with the limited supply of omnichannel supermarkets, “we remain highly optimistic for the valuation outlook for the year”.
The company noted that UK grocery market sales were up by 8% during the period, with a forecasted growth to £250 billion in 2024.