Supermarket Income REIT has acquired of a Sainsbury’s omnichannel supermarket in Huddersfield for £49.7 million reflecting a net initial yield of 7.6%,funded via the drawdown of the SUPR’s existing debt facility

The food store comprises a 113,348 sq ft gross internal area omnichannel supermarket and a petrol filling station, situated on an 8.5 acre site. Sainsbury’s has traded from the site for over 30 years. and is an online fulfilment hub for the operator with 12 home delivery vans and Click & Collect services. The store is being acquired with an unexpired lease term of 11 years with annual RPI-linked rent reviews (subject to a 4% cap and a 0% floor).

The Acquisition is a continuation of the Company’s strategy to grow earnings through a combination of accretive acquisitions, capital re-cycling and cost savings, thereby supporting growing dividends to shareholders.

The Company is undergoing significant strategic and operational developments to enhance earnings and dividend growth. Key updates include:

1. Management Fee Change: Starting 1 July 2025, the management fee will shift from being based on net asset value to market capitalization, with related functions transferred to Atrato Capital Limited. This move, pending shareholder approval at the AGM on 16 December 2024, is expected to cut costs and boost earnings from 2025-2026 onwards.
2. European Expansion: The Company seeks shareholder approval to amend its investment policy, allowing for increased flexibility to acquire earnings-accretive assets in Europe incrementally.
3. Capital Recycling: Plans are in place to opportunistically sell assets or form joint ventures, with proceeds potentially reinvested into higher-yielding assets, debt reduction, or share buybacks.
4. Lease Extensions: Efforts are underway to extend shorter leases, enhancing portfolio WAULT and affirming operator commitment to prime trading locations.
5. South African Listing: Progress is being made toward a secondary listing on the Johannesburg Stock Exchange (JSE), with strong interest from South African investors and further updates pending confirmation of the listing timeline.

Ben Green, Principal of Atrato Capital Limited, the Investment Adviser to Supermarket Income REIT plc, said:  

“The team has been, and remains, incredibly active across a range of strategic and operational developments, all driven by our focus on delivering value for shareholders. We are pleased that shareholders will have the ability to vote on two proposals – to make further improvements to the cost base and to provide greater flexibility for accretive acquisitions – at the upcoming AGM.

We are also very pleased to announce this UK acquisition. We remain highly focused on driving returns and we continue to explore all avenues to deliver value for shareholders of Supermarket Income REIT.”

Below is a video, shot with the investment team of Atrato Group, the advisors behind SUPR, highlighting the Group’s investment strategy