Currency in GBP
Last close As at 04/02/2023
GBP1.05
▲ 7.90 (8.18%)
Market capitalisation
GBP1,200m
Research: Real Estate
Supermarket Income REIT targets an attractive level of income, with the potential for capital growth, and 7–10% pa total shareholder return over the medium term. It invests in a diversified portfolio of supermarket property, let to leading UK supermarket operators on long, RPI-linked leases. EPRA NAV total return in the six-month period was 3.1% or an annualised 6.3% (see our last update). The company plans to raise c £25m in new equity to part fund additional, identified assets.
Supermarket Income REIT |
Targeting further growth |
Proposed issue of shares |
Real estate |
13 March 2019 |
Share price performance Business description
Analyst
Supermarket Income REIT is a research client of Edison Investment Research Limited |
Supermarket Income REIT targets an attractive level of income, with the potential for capital growth, and 7–10% pa total shareholder return over the medium term. It invests in a diversified portfolio of supermarket property, let to leading UK supermarket operators on long, RPI-linked leases. EPRA NAV total return in the six-month period was 3.1% or an annualised 6.3% (see our last update). The company plans to raise c £25m in new equity to part fund additional, identified assets.
SUPR plans to raise c £25m in new equity capital by way of a placing and offer for subscription of 24.7m new ordinary shares at 101p. Depending on demand and the number of shares issued, the proceeds, and associated gearing, will be used to acquire one or more additional supermarket assets. This will further diversify the portfolio and supplement the existing and growing inflation-linked income stream. SUPR expects the increase in the size of the company to generate operating efficiencies by spreading its fixed operating expenses over a larger issued share capital, while there is potential for share trading liquidity to be enhanced and the shareholder base broadened. Two near-term acquisition targets that meet the company’s stringent acquisition criteria have been identified and are currently in advanced due diligence. Both are omnichannel stores let to Tesco, benefitting from RPI-linked leases with a weighted average lease term of 19 years, and low site cover, proving asset management opportunities. Three additional opportunities with an aggregate value of c £160m have been identified. Details of the share placing, which is expected to close by 21 March 2019, are available on the company’s website (www.supermarketincomereit.com). The new shares will be entitled to the third quarterly DPS, targeted at 1.419p, due to be declared in April 2019.
Consensus estimates
Year |
Revenue |
EPRA EPS* |
EPRA NAV/ |
DPS |
P/NAV |
Yield |
06/18 |
8.9 |
3.8 |
96 |
5.50 |
1.07 |
5.3 |
06/19e |
16.3 |
5.4 |
99 |
5.63 |
1.04 |
5.5 |
06/20e |
17.3 |
5.9 |
104 |
5.75 |
1.00 |
5.6 |
Source: Supermarket Income REIT data, Consensus data calculated from Stifel and Goodbody estimates. Note: *EPRA EPS is normalised, excluding gains on revaluation. |
Disclaimer
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Disclaimer
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Research: Metals & Mining
Pan African’s (PAF) earnings and output in H1 were consistent with our prior FY19 expectations, with a 54.2% increase in gold produced from continuing operations and a 23.1% decline in AISC combining to result in a 116.7% increase in EPS in GBP. Compared with H218, there were substantial cost improvements at Barberton, the Barberton Tailings Retreatment Project (BTRP) and the Evander Tailings Retreatment Project (ETRP). Most encouragingly, unit working costs at Elikhulu were 4.3% lower than our long-term projections and a similar performance in FY20 will propel EPS to closer to c 2p/share.
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