Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) shares offer value and a dividend yield of 8.6%, said broker Stifel as it reiterated its 'buy' recommendation at 80p share price target.
This followed an update from the real estate investment trust about various recent portfolio initiatives, including the sale of one Tesco store, lease renewals on three other Tesco sites and the acquisition of a handful more Carrefour supermarkets in France.
Selling a Tesco's store in Newmarket recouped £63.5 million at a 7.4% premium to book value from last June, which Stifel analysts said "provides useful evidence of the wider portfolio value".
The lease renewals of the three shortest leases in the Tesco portfolio, adding an extra 15 years at an average 13% ahead of the estimated rental value, with annual RPI-linked rent reviews subject to a 0-4% floor/cap, are expected to contribute to positive capital value growth at the June 2025 valuation, the broker added.
As a result of the re-gearing, the overall portfolio's weighted average unexpired lease term will increase to 12 years from 11 years, and the next material lease expiry is not until 2032.
Looking at the shares' 8.6% yield, with the dividend fully covered, and 22% discount to the current NAV forecast, Stifel said: "Even against a sector that has been particularly bruised over the last 6 months, Supermarket Income REIT's shares offer particular value".