Following FY19 results that showed strong growth driven by the continued steady build-up of the portfolio, contracted RPI-linked rental growth, and improving efficiency, Supermarket Income REIT (SUPR) intends to raise c £50m in a share placing and offer with the proceeds directed at further portfolio acquisitions. FY19 shareholder total return was 8.0%, taking the total to 16.1% in the two years since IPO. The FY20 DPS target has been increased in line with inflation to 5.80p, implying a yield of 5.6%.
SUPR intends to raise c £50m by way of a placing and offer for subscription of c 49.0m new shares (the ‘initial offer’) at 102p as part of a broader placing programme of up to 200m shares. The proceeds will provide additional resources for the further growth of SUPR’s diversified portfolio of UK supermarket assets, with long leases and upwards-only RPI-linked rents, let to quality tenant covenants.
The company has identified three ‘target assets’ with an aggregate value of c £140m, as a well as a pipeline of a further four assets on which preliminary due diligence has begun. The investment adviser brings a high level of experience and knowledge of the sector and was joined in March 2019, as a senior adviser, by Justin King, the former CEO of Sainsbury’s. Since IPO in rapidly deploying available capital while pursuing a highly selective acquisition strategy, predominantly targeting omnichannel stores (combining in-store and online fulfilment).