Supermarket Income REIT acquires £40.9m of food store acquisitions
Supermarket Income REIT has acquired a Tesco supermarket and 10 Sainsbury’s convenience stores for a total of £40.9m.
The Tesco store, located in Craigavon, Northern Ireland, has been acquired at a purchase price of £25.6m, reflecting a net initial yield of 6.5%. The 8.6-acre site comprises a 130,000 sq ft supermarket and petrol filling station, and also serves as an online fulfilment hub.
The unexpired term of the triple-net lease is 15 years with five-yearly rent reviews, capped and collared at 4% and 0% respectively, with a rent of £12.70 per sq ft.
The real estate investment trust has also completed the acquisition of 10 Sainsbury’s convenience stores for a total of £15.3 million, reflecting a net initial yield of 6.1%. The stores have been acquired from Sainsbury’s with 15-year triple-net leases that benefit from five-yearly rent reviews, subject to a 3% cap and 1% floor.
The acquisition of these strong trading stores represents the group’s first investment in the convenience grocery sector.
Supermarket Income REIT said that following these transactions the company has now redeployed £99.8 million of the proceeds of its strategic joint venture with funds managed by Blue Owl Capital, which was announced in April, at a net initial yield of 6.7%.
Rob Abraham, CEO of Supermarket Income REIT, said: “We continue to make good progress with redeploying the proceeds from our joint venture into income accretive opportunities. We have a strong pipeline of large format omnichannel supermarkets, whilst we also see attractive relative value in smaller format convenience stores as demonstrated by our acquisition from Sainsbury’s. Our relationship-led model and sector specialism continues to set us apart in the market, enabling us to unlock these unique opportunities and strategically scale the business.”