Supermarket Income REIT PLC snaps up another Sainsbury’s and a first

Supermarket Income REIT PLC (LSE:SUPR) acquired two supermarkets for a total purchase price of £55.1mln, reflecting a combined net initial yield of 5.3%.

The deal includes a supermarket owned by Sainsbury’s and its first purchase of an Asda store.

The real estate investment trust said it also arranged an increase to its revolving bank debt facility by £136.5mln to £250.2mln, with a further £49.8mln uncommitted accordion option. The facility has a remaining term of two years and two further one-year extension options.  

With purpose-built online fulfilment docks and operated as key hub for online fulfilment operations across the region, the Sainsbury’s supermarket is in Washington, Tyne and Wear, is being acquired with an unexpired lease term of 34 years, with seven-yearly, upwards only, RPI-linked rent reviews.

Located in the town centre, the 11.7 acre site includes a store sales area spanning 83,800 sq ft, a 24-pump petrol filling station and 800 car parking spaces. 

The acquisition also includes two standalone quick service restaurant units operated by KFC and Tim Hortons (TSX:THI) co-located on the same site.

It follows two recent Sainsbury’s acquisition in Sheffield for just over £73mln and in Cannock for almost £76mln. 

Supermarket Income REIT’s first acquisition of an Asda site is located in Cwmbran, South Wales, comprising a 81,600 sq ft net sales area omnichannel supermarket located on a 4.4 acre site adjacent to Cwmbran Shopping Centre.

Trading on the site since the 1970s, Asda developed the current store format in 2015 and is currently undergoing further expansion to incorporate new purpose-built online fulfilment docks to form an important part of Asda’s online fulfilment operations in the region.

The Asda store is being acquired with an unexpired lease term of 10 years, with five-yearly, upwards only, open market rent reviews. 

Ben Green, director of Atrato Capital, the investment adviser to the trust, called the acquisitions “strong additions” to the REIT’s portfolio of omnichannel stores, with the Asda store providing further tenant diversification.

In combination, he said they are accretive to both the weighted average unexpired lease term and net initial yield of the company’s portfolio. 

On the debt facility he added, “We are also pleased to further strengthen our relationships with Barclays and Royal Bank of Canada (TSX:RY), who continue to be key funding partners for Supermarket Income REIT. The increased facility provides us with additional capacity as we deploy the proceeds of our recent equity raise.”