Supermarket Income REIT

LN: SUPR

Market Cap£953m

Last Close 117.5p

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.

Investment summary

FY21 net rental income of £48.0m was up c 82% versus FY20 and EPRA earnings more than doubled to £36.8m or 5.6p per share (FY20: 5.0p). FY21 performance did not reflect the full impact of portfolio growth in the period and subsequently, with end-FY21 annualised passing rent of £60m (end-FY20: £28.7m), since increased to £64.9m on a pro forma basis. The FY22 target DPS was increased by 1.4% to 5.94p. Since reporting, SUPR has announced its intention to raise c £100m of additional equity at 115p per share (‘the issue’) in combination with a 12-month placing programme, both subject to shareholder approval. The net proceeds of the issue will be directed at further acquisition-led investment from a substantial pipeline of identified investment opportunities.

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	23.5	14.6
2021A	45.9	38.7	36.8	5.6	21.0	39.1
2022E	66.3	59.2	58.3	7.2	16.3	16.3
2023E	69.0	61.5	59.9	7.4	15.9	16.1

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 20/10/2021