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Supermarket Income REIT

LN: SUPR

Market Cap£1,598m

Last Close 129p

Supermarket Income REIT, listed on the special funds segment of the LSE, invests in supermarket property, let to leading UK supermarket operators, on long, RPI-linked leases. The investment objective is to provide an attractive level of income, with the potential for capital growth.

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Investment summary

Supermarket Income REIT (SUPR) has raised £300m (gross) in a substantially oversubscribed equity issue that had initially targeted £175m. Investor demand was accompanied by an increase in the availability of attractive investment opportunities. Acquisition-led growth has increased diversification and generated economies of scale. Migration to the Premium Segment of the LSE, with likely inclusion in the FTSE 250 and EPRA NAREIT indices in June, should provide access to a wider pool of investors and the attainment of an Investment Grade credit rating should increase debt funding flexibility, as equity proceeds are deployed. With 85% of rents index-linked inflation is providing a positive tailwind for SUPR and given the non-discretionary nature of most grocery sales, operators have historically benefitted also. Structural shifts to home working and online shopping add additional support to SUPR’s omnichannel store focus.

Y/E Jun
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (p)
P/E (x)
P/CF (x)
2020A 25.5 21.2 16.8 5.0 25.8 16.0
2021A 46.2 38.7 36.8 5.6 23.0 19.7
2022E 69.1 57.3 56.5 6.1 21.1 20.7
2023E 80.7 68.0 61.4 6.2 20.8 19.1
Industry outlook

Supermarket property has a long record of positive total returns underpinned by stable income returns in part due to long-leases, a strong occupier covenant, and the non-cyclical nature of grocery retailing. Supermarkets have been net beneficiary of the pandemic which has boosted sales, particularly online and fulfilled by omnichannel stores.

Last updated on 20/05/2022
Content on Supermarket Income REIT
Supermarket Income REIT – Financial and strategic progress
Real Estate | research Outlook | 21 March 2022
architecture-building-business-264507
Supermarket Income REIT – Unlocking value in the JV
Real Estate | research Update | 11 January 2022
architecture-building-business-264507
Supermarket Income REIT – Supermarket sweep
Real Estate | research Update | 13 December 2021
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Share price graph
Balance sheet
Forecast net debt (£m) 613.2
Forecast gearing ratio (%) 54
Price performance
%
1m
3m
12m
Actual 2.8 9.3 12.7
Relative* 6.6 12.3 10.4
52-week high/low 130.0p/114.2p
*% relative to local index
Key management
Ben Green Investment Adviser
Haffiz Kala Finance director, Atrato Partners
Steve Windsor Investment Adviser