Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) has completed £40.9 million worth of property acquisitions, including a portfolio of Sainsbury’s convenience stores and a major Tesco site in Northern Ireland, as it redeploys capital from a recent joint venture.
The investment company, which invests in grocery-focused real estate, said the deals would boost earnings and improve its weighted average unexpired lease term (WAULT), a key measure of portfolio stability. The average net initial yield across both transactions was 6.4%.
The largest of the two purchases is a £25.6 million acquisition of a Tesco omnichannel store in Craigavon, Northern Ireland. The 130,000 square foot property sits on an 8.6-acre site and includes a petrol station.
It functions as both a retail outlet and a fulfilment hub, with 12 delivery vans and Click & Collect services, with Tesco operating the store under a 15-year triple-net lease, with rent reviews tied to the consumer prices index (CPI), capped at 4% and floored at 0%. The current rent is £12.70 per square foot.
In a separate transaction, Supermarket Income REIT has entered the convenience grocery market for the first time, acquiring 10 Sainsbury’s convenience stores for £15.3 million.
The outlets, which average 5,800 square feet each, are located in densely populated urban areas across the UK, including Bristol, Edinburgh, Sheffield, and Nottingham.
They are let on 15-year leases with CPI-linked rent reviews, capped at 3% and floored at 1%.
“These strongly performing stores have an average gross internal area of 5,800 square feet and are situated in densely populated town-centre locations across the UK, with strong footfall and visibility,” the company said.
The purchases form part of a broader strategy to reinvest proceeds from Supermarket Income REIT’s partnership with US-based Blue Owl Capital, agreed earlier this year.
To date, £99.8 million of those proceeds have been redeployed at an average yield of 6.7%.
The acquisitions bring the company’s pro-forma loan-to-value (LTV) ratio to 36%, with a portfolio WAULT of 11 years.
Chief executive Rob Abraham said: “We continue to make good progress with redeploying the proceeds from our joint venture into income accretive opportunities.
"We have a strong pipeline of large format omnichannel supermarkets, whilst we also see attractive relative value in smaller format convenience stores as demonstrated by our acquisition from Sainsbury’s.”
He added: “Our relationship-led model and sector specialism continue to set us apart in the market, enabling us to unlock these unique opportunities and strategically scale the business.”