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LONDON - Supermarket Income REIT (LSE: LON:SUPR), a UK-based real estate investment trust specializing in grocery properties, has announced a series of strategic portfolio developments aimed at enhancing shareholder value. The company confirmed the sale of a Tesco (OTC:TSCDY) store in Newmarket (NYSE:NEU) for £63.5 million, a 7.4% premium over its June 30, 2024, valuation. The transaction underscores the value of the company’s assets to supermarket operators and its strategy to recycle capital for earnings growth.
The company has also successfully renewed leases for three Tesco stores in Bracknell, Bristol, and Thetford at terms reportedly 35% above the MSCI supermarket benchmark index and 13% above estimated rental values as of June 30, 2024. These renewals extend the leases to 15 years with annual RPI-linked rent reviews, capped at 4% and floored at 0%. The company anticipates these regeared stores will contribute to capital value growth reflected in the June 30, 2025, valuation.
Further expanding its European footprint, Supermarket Income REIT has acquired nine Carrefour (EPA:CARR) supermarkets in France for €36.7 million, excluding acquisition costs. These stores, part of Carrefour’s online grocery fulfillment network, were acquired with a net initial yield of 6.8% and are expected to enhance earnings due to their spread to the cost of debt. The acquisition was financed through a private placement of €39 million in new senior unsecured notes with a seven-year maturity and a 4.1% fixed-rate coupon.
Following these transactions, the company reports a weighted average unexpired lease term (WAULT) increase from 11 to 12 years, with the next material lease expiry not due until 2032. The company’s pro-forma loan-to-value (LTV) stands at 38%.
Nick Hewson, Chair of Supermarket Income REIT, expressed confidence in the company’s progress on initiatives set in November 2024, emphasizing the inherent value of the portfolio and the importance of the stores to grocery operators. He also highlighted the company’s ongoing focus on cost savings and strategic initiatives.
The company, which is listed on the London and Johannesburg stock exchanges, is advised by Atrato Capital Limited. These updates are based on a press release statement from Supermarket Income REIT.
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