Supermarket Income REIT (SUPR) is undertaking a £100m equity raise to acquire nine grocery assets for £216m.
SUPR asset: Waitrose, Market Harborough, Leicestershire
The deal is split into two portfolios: an imminent acquisition of three supermarkets on triple-net leases for £118m; and a later deal for six grocery assets for £98m.
The imminent deal, expected to complete in September, includes a Sainsbury’s in Manchester with a rent of £34/sq ft, a Tesco store in Edinburgh with a rent of £33/sq ft and a Tesco store in Halifax with a rent of £35/sq ft.
“This fundraise will enable us to continue executing SUPR’s growth strategy, and is the latest step towards our ambition of doubling the size of our portfolio,” said Rob Abraham, chief executive of SUPR.
“The pipeline of assets will be earnings-enhancing and aligns with our portfolio strategy of acquiring well-located grocery assets with strong trading histories, let on resilient triple-net leases.”
Rob Abraham, chief executive of SUPR
The second deal, expected to complete near the end of the year, includes five UK supermarkets let primarily to investment-grade tenants with an average rent of £26/sq ft and one grocery distribution asset let to an investment-grade grocery tenant at £14/sq ft.
The REIT will raise the proceeds through the issue of new ordinary shares of £0.01 each. The issue comprises an institutional placing; a placing to selected qualifying investors in South Africa; and a retail offer, which will provide eligible existing and new retail investors in the UK with an opportunity to participate.
SUPR owns, directly and indirectly through its joint venture (JV), 131 supermarket assets across the UK and France, with an aggregate value of £2bn and generating an annual rental income of £129m.
Last April, the REIT formed a 50:50 JV with funds managed by Blue Owl Capital, which has grown from a seeded value of £403m to £845m, driven by a £196m sale-and-leaseback deal for 10 Asda supermarkets as the duo push towards their £1bn goal.
Abraham added: “We remain confident in the scale of opportunity in grocery real estate and will continue to build on our unique position as the leading landlord in the sector to grow and enhance returns for our shareholders.”
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