Supermarket Income REIT looks to raise £100m to fund acquisitions
Supermarket Income REIT is looking to raise approximately £100m through the issue of new ordinary shares.
This comes as the real estate investment trust, which specialises in grocery assets, expects imminently to acquire a portfolio of three supermarkets for £118m, reflecting a net initial yield of 6.9%. The portfolio comprises a Sainsbury’s in Manchester with a rent of £34 per sq ft. and a 12 year unexpired lease term (ULT), a Tesco store in Edinburgh with a rent of £33 per sq ft. and a ULT of five years, and a Tesco store in Halifax with a rent of £35 per sq ft. and a ULT of eight years.
The group also has a further pipeline of six UK grocery assets in the UK let to major grocers, with completion expected in the next three months for an aggregate consideration of £98m. The assets include five UK supermarkets let primarily to investment grade tenants geographically spread across the UK, with a weighted average unexpired lease term of 13 years and average rents of £26 per sq ft, as well as one grocery distribution asset with a ULT of 15 years and a rent of £14 per sq ft.
The REIT said the £100m target of the equity raise will enable it to purchase both the portfolio and the pipeline assets together for £216m in aggregate.
Rob Abraham, CEO of Supermarket Income REIT, said: ”This fundraise will enable us to continue executing [Supermarket Income REIT]’s growth strategy, and is the latest step towards our ambition of doubling the size of our portfolio. The pipeline of assets will be earnings-enhancing and aligns with our portfolio strategy of acquiring well-located grocery assets with strong trading histories, let on resilient triple-net leases.
“These acquisitions will build on the significant strategic progress that we have delivered over the last 18 months, having created one of the most efficient and scalable platforms for growth with one of the lowest EPRA cost ratios in the sector. We remain confident in the scale of opportunity in grocery real estate and will continue to build on our unique position as the leading landlord in the sector to grow and enhance returns for our shareholders.”