INVESTMENT CASE

Supermarket Income REIT provides Shareholders with an attractive level of income together with the potential for capital growth by investing in supermarket real estate assets 

Omnichannel - the future model of grocery

  • A key pillar of our investment strategy is to invest in omnichannel stores. These are larger  supermarkets that provide normal in store shopping, but they also operate as last mile online grocery fulfilment centres for home delivery and click and collect.

  • We believe these stores not only benefit from conventional in store grocery sales but are also uniquely positioned to benefit from any increase in online grocery sales.

 

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Asset-backed, long-term growing income

  • We acquire supermarket property with long, inflation linked leases (we target a portfolio average of 15 years to expiry or first break) and aim to provide investors with a long-term and secure income stream which is expected grow with inflation.

  • The income profile of the assets allows us to target a dividend per share of 5.9 pence for the year ending 30 June 2021, which we have grown in-line with inflation since IPO in 2017.​​

  • The majority of our stores are leased to the four largest UK supermarket operators by market share, which are currently Tesco, Sainsbury’s, Asda and Morrisons. (1) 

  • We typically buy assets located in highly populated residential areas, with strong transportation links. 

 

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Asset management opportunities

  • Many of our sites have asset management opportunities, such as the installation of renewable energy systems and/or the development of surplus space. 

  • Improving the sustainability performance of our assets, for example by improving their energy efficiency via renewables, is an important part of our investment strategy. 

 

Financial strategy

  • We fund our acquisitions through shareholders’ equity and bank borrowings. We raise equity at times when we identify appropriate assets, consistent with our returns profile and can deploy the capital raised quickly.

  • Our strategy for borrowings is to maintain a target LTV of 30-40% over the medium term.

  • We pay dividends quarterly which we grow progressively through the Group’s upward-only inflation linked long-term lease agreements.

  • Our targeted net total shareholder return is 7% to 10% per annum over the medium term.

 

(1) Kantar Worldpanel 19/05/2021

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