Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) has bulked up its presence in France after snapping up a large portfolio of Carrefour supermarkets for €123 million, marking its biggest continental move to date and completing the redeployment of cash raised earlier this year.
The company said it had acquired 20 supermarkets from Carrefour through a direct sale-and-leaseback agreement.
These are long-established stores with strong trading records and form part of the French retailer’s “Drive” network, which handles online grocery orders.
Because sale-and-leaseback deals involve a retailer selling property but continuing to rent it, they are often used to release capital while keeping stores in place.
Supermarket Income REIT highlighted several features it believes make the deal attractive: the portfolio is spread across France, sits in areas with limited competition and carries average rents of €9.70 per square foot.
The stores, averaging about 44,000 square feet each, are valued at €139 per square foot, which the company said is well below their estimated replacement cost.
The leases run for an average of 12 years, with a break option for Carrefour in year 10, and include uncapped annual inflation-linked rent reviews. On completion, the portfolio delivered a net initial yield of 6.6%.
A yield in this context represents the annual rental income as a proportion of the purchase price, helping investors gauge the potential return.
The purchase has been financed through the company’s existing revolving credit facility. Borrowing in euros is capped at an all-in cost of 3.5% until June 2030, giving the deal a comfortable buffer between income and financing costs.
After the acquisition, loan-to-value, a common measure of borrowing relative to the value of assets, stands at 40%.
The group now owns 46 Carrefour stores in total, which it says gives it meaningful scale in France. If it deploys its remaining debt capacity into its current pipeline, the company expects Carrefour-related assets to account for about 10% of its overall portfolio.
The deal also completes the redeployment of roughly £200 million raised in an April 2025 joint venture with Blue Owl Capital. The company said the proceeds have been placed into assets yielding an average of 6.6%, with the joint venture supplying additional fee income.
Rob Abraham, chief executive of Supermarket Income REIT, said: “I am delighted that we have now taken our French exposure to scale through another direct sale and leaseback transaction with Carrefour as we continue to recycle capital into earnings-enhancing opportunities that further diversify our portfolio.
SUPR is targeting a number of attractive UK pipeline transactions in the coming months, supporting the delivery of a fully covered and growing dividend over the long term.”