Supermarket Income Reit Share Discussion Threads

[spectoacc] 19/4/2024 06:40

The trick is buy low, sell high. Missed the dip below 70p but happy to be back as a holder.

[badtime] 18/4/2024 23:17

Nah everyone's sold up ..amazing that 2.8m was traded today ...must be a glitch

[m_kerr] 15/4/2024 13:14

As far as i can see rents are usually renewed at 4% of turnover. How this will affect omnichannel stores whose turnover is inflated by lower margin home delivery sales i don't know. but the current portfolio is at 3.8%.

note that of the SBRY JV assets not acquired by SBRY, these were renewed on 10 year leases without RPI / CPI uplifts. they were in the books at 7% NIY as of the september results.

the first chunk of leases expire is in 5 years time (2 stores at £6m) and we'll get an idea of whether rents are sustainable and on what terms they are renewed.

by then of course you've already got 40%+ of your capital back in dividends.

[rongetsrich] 15/4/2024 13:08

Very nyeresting, thanks.

[cc2014] 14/4/2024 12:10

Thanks for this.

It's interesting that the quality of posting has increased lately.

This with posters have a far greater focus on fundamentals suggests to me that some of the speculative cash has left the market.

All necessary imho to form a market bottom, which I consider to still be some way off but getting there.

Perhaps what we are seeing is pockets of value now if we pick the right stocks.

[spectoacc] 14/4/2024 08:03

Agreed, thanks @chucko1. Anyone without the time to read it all should read the last paragraph.

(A trading friend sent me the link. Don't know where he got it from & he doesn't hold SUPR).

[nickrl] 13/4/2024 21:29

@chucko excellent insight thanks for taking the time to pick it apart

[riverman77] 13/4/2024 18:04

Worth watching the IMC presentation if you have time - they outline what a diverse market this is with a wide range of yields (anywhere from 5 to 8% depending on the store, length of lease and the tenants). They state their average rent is £23 psf and this is well below many recent regears in the market. They also say they specifically target large omni channel stores which have seen the strongest growth, so very hard to believe these are over rented. In fact they say they're recently been buying stores on a shorter lease term to capture this reversion!

[williamcooper104] 13/4/2024 17:45

Still can't complain - got a CFD opened at a touch above 70

[williamcooper104] 13/4/2024 17:44

Yep it doesn't seem a lot more than the asset in stoke is at a high yield so it must be over rented so the whole portfolio must be and that's only going to get worse with RPI uplifts He then tries to split the rents down between retail space and admin/logistics Even if you take that approach the logistics rents would mostly be last mile so in many locations getting on for what the retail rents would be

[riverman77] 13/4/2024 17:15

I really don't think the Jeffrey's analyst has got this right and reading the note you don't get the feeling he really understands the sector - there is no evidence of over renting, in fact quite the reverse. In the Q&A from recent IMC presentation, the management said supermarket profits had grown a lot faster than rent reviews, meaning rents have become more affordable. He also specifically stated that the reversion of the portfolio has actually increased (ie the market rents are higher than the rents they're currently locked into). He appears to be basing his theory on one dataset - the high yielding Stoke store - but of course every store has its own dynamics and can't extrapolate this across entire portfolio. The guys running this know the sector inside out so trust them to be able to cherry pick the best opportunities and deliver good returns.

[flyer61] 13/4/2024 11:07

That's exactly how I read it nickl. A tidy up exercise to ensure anybody bidding would know the cost of getting rid of the Atrato. 2 years to find a new job is plenty enough time!

[nickrl] 13/4/2024 10:46

The Stoke acquisition they quote is clearly an outlier and in all likelihood would reset lower but thats 11 years down the line so thats an outlier. Bottom line is Atrato have built up a good portfolio here and done the financial engineering and their work is done so it doesn't need the high cost o/h's anymore. Id also say them putting in the IAA change was advertising they are for sale and that was their exit fee.

[williamcooper104] 12/4/2024 17:18

How's Alton Towers going to play out for LMP

[williamcooper104] 12/4/2024 17:18

There's always the risk that > 10 years of compounding leads to an over rented lead at expiry But that's true of every reit with long index/fixed uplift leases I'm not seeing anything to show that current rents are over rented

[cwa1] 12/4/2024 17:15

Decent volume today with over 13.5M reported already

[spectoacc] 12/4/2024 16:12

It's an interesting view. I don't know enough about the rental values..

For me, SUPR can't be compared to Linkers, because Linkers pay out the inflationary rise - we've just had a classic period when SUPR (& the rest) didn't. But if inflation's say 10%, max rent rise 4%, I'd have thought that represented slippage and better reversion.

The note seems to be arguing that (say) 4% rises are leading to over-renting instead. Be surprised if that's the case - the value of money falls 10%, your rent compounds at 4%. Where's the surplus property to set the lower rents? This isn't Retail or Offices.

[williamcooper104] 12/4/2024 14:53

They're basically assuming super markets are the new out of town shopping centres "Our concern is that the c. £30psf passing rent and indexed annually to inflation will reset to nearer c. £20psf on lease expiry with the £10psf 'top slice' income from over renting capitalise at higher yields and depressing capital values."

[williamcooper104] 12/4/2024 14:43

If you turn to the appendixs you can see that we've got a WACC assumed of 10.6 againt reit average of 8.5 and only a little lower than GPOR/DWNT

[m_kerr] 12/4/2024 14:09

The historically awful capital allocation of the listed big 4 suggests they arent exactly savvy operators. Tesco has probably improved a bit in fairness, but that's a very low bar to clear.

As far as I've seen, buybacks have been slow recently (apart from the top of the market SBry reversion JV - which again doesn't inspire confidence in their reading of the property market).

[williamcooper104] 12/4/2024 13:46

By equiv yield data I presume they mean market rental rates, I think they mean the Stoke asset is over rented and thus much of the portfolio could be too That supermarket operators are still buying back their leased assets tells you all need to know about that argument They know more than any analyst

[williamcooper104] 12/4/2024 13:43

I got to 8 by taking headline rent of £105m against debt of £547 and a market value on 60p of £748m Private market quoted net yields are only net of purchasing costs

[flyer61] 12/4/2024 13:23

The spread trade experiment is over and our focus stock is SUPR, which we cut from Buy to Unpf on -33% PT to 60p (90p) on DCF vs. NAV basis. Indexation continues to push rents in excess of the levels the market will likely support, latterly with the high-yield Stoke-on-Trent acquisition, there is a lack of equivalent yield data, as well as a new investment advisory agreement.

I would say it is the opposite....with caps on the RPI linked rents around the 4% mark. For the stores SUPR has it could easily be higher rentals at renewal.
Lack of equivalent yield data??? really
The new investment advisory agreement is just a clarification exercise by the BOD?