Resilient grocery sector pushes Supermarket Income REIT’s rents to £100m

20th September 2023 | Jack Oliver

Supermarket Income REIT’s rents reached over £100m during the last financial year, with the grocery sector having “demonstrated resilience”, despite challenging macroeconomic conditions.

The real estate investment trust’s total annualised passing rents reached £100.6m during the year to 30 June, an increase of 30% against the previous year.

Supermarket Income REIT said it had seen occupancy and rent collection rates both at 100%, with an average rental uplift of 4.1%.

The REIT, which invests in grocery property, also recorded a year-on-year increase in operating profit of 37%, up from £58.2m in 2022 to £79.8m in 2023. It said that the UK grocery market had grown by 11% during the period.

The group’s net asset value declined by 15% to £1.21bn during the period, following the offloading of its interest in 21 Sainsbury’s supermarkets to the retailer for a total consideration of £430.9m. The REIT also acquired 11 supermarket properties for £399m.

Nick Hewson, chair of Supermarket Income REIT plc, said: “The UK grocery sector has again demonstrated resilience despite the challenging macroeconomic environment we have experienced during the year. We remain focused on our investment strategy of acquiring and managing a high-quality portfolio of omnichannel supermarkets. These give us exposure to the fastest growing segment of the UK grocery market which itself is experiencing strong growth.

“During the year, Sainsbury’s purchased our interest in the Sainsbury’s Reversion Portfolio joint venture for £430.9 million which we redeployed into higher-yielding supermarkets that met our strict investment criteria alongside reducing our debt, materially strengthening our balance sheet.

“This purchase by one of our own tenants of 21 of its own stores highlights the attractiveness of UK supermarket property, which is further illustrated by the fact that the year has seen in excess of £1.7 billion of investment volume in our property sub-sector, driven by the positive long-term outlook for UK grocery. This activity has contributed to stabilising property valuations in the UK supermarket property sub-sector.”


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