Supermarket Income Reit Share Discussion Threads

[nickrl] 23/2/2023 21:21

2068 indexed linked gilt presumably

[scruff1] 23/2/2023 20:13

big 2068 linker ??

[badtime] 23/2/2023 19:53

That's quite volume of trade today

[chucko1] 23/2/2023 11:03

Real yields were always going to put this at risk. Hardly surprising, although, as often previously stated, the stickiness of SUPR and then big drop with respect to real yields on the big 2068 linker (and others, obviously) made it less easy to see this. But it's basically financial gravity.

As for the other talking points, I think they are relatively minor.

The 5.5% discount yield is pretty arbitrary. The degree of inflation linkage (to be determined, especially given the level of caps/floors) and real yields tell the real story. Of course, the valuers will have included that in their assessment of fair value, except they are only ever able to look backwards on these things. If they were able to look forward, they would not be valuers, but deal doers. Harsh, but true.

[williamcooper104] 23/2/2023 10:12

Jittery market with rising gilt yields doesn't take a lot to sell of

[riverman77] 23/2/2023 10:00

Everyone knew property prices were going to be down around 15% so no idea why the market appears to be surprised by this announcement. I would personally ignore the NAV and focus on the 6.5% yield, which is probably about as secure as you can get in the property sector given the nature of the tenants.

[williamcooper104] 23/2/2023 08:39

Sainsbury's are buying back most of the stores from the JV

[spectoacc] 23/2/2023 08:36

Or is the key thing supermarket wafer-thin margins. And "..Tenants trying to buy their premises.." is the reverse of the business model surely - the supermarkets very keen to sell them to SUPR!

Not a holder, but feels more interesting down here (or lower).

[williamcooper104] 23/2/2023 08:34

And long leased commerical property is usually a high quality bond until the lease expires whence upon it becomes a Greek bond - sort of a reverse Trojan horse - the Germans bearing the gift containing Greek credit Key thing with SUPR is tenants trying to buy their premises and the rent to turnover being at 4 percent and getting less as food price inflation matches on

[williamcooper104] 23/2/2023 08:29

Yep - yield shift is yield shift - you can't escape gravity On the plus side we will soon have a NAV reflecting a 5.5 NIY We all love yields coming in but that's actually robing future returns; so conversely yield expansion sets up higher future returns (even if it's a bit painful in the here and now)

[cwa1] 23/2/2023 08:28

Shame that this has happened just as the dividend hit the account...unless, of course, you plan to reinvest it in to more of course!

[spectoacc] 23/2/2023 08:28

Bonds (generally!) redeem at par!

[riverman77] 23/2/2023 08:25

Depends what you mean by reliable. It's reliable in the same way as a bond is reliable - a safe income stream. That doesn't mean the price will be stable - bond prices have fallen a lot as yields have risen and SUPR has more or less moved in line with that dynamic.

[mister md] 23/2/2023 08:17

Thought this would be a reliable investment, but shareprice performance has not been SUPR ...

[frazboy] 23/2/2023 07:44

You need to adjust for the debt? NAV/share down perhaps 17% ish?

From Edison’s recent report:

‘Our previous assumption, and we stress assumption given the level of uncertainty, was that the valuation yield on SUPR’s portfolio would increase by c 35bp from the 30 June 2022 (FY22) level of 4.6%. We now assume a 50bp increase during FY23 (an implied c 6% reduction in property values) and for yields to drift higher over the following two years, reaching 5.25%, as capital values fail to fully keep pace with rent growth.’

If I understand correctly todays announcement says the valuation yield is now 5.4%


The reason for the recent share price weakness is now evident. Valuations have been reduced more than may have been expected. I’m assuming the dividend is sustainable - any one have any comment on that, nickrl?

[riverman77] 23/2/2023 07:41

Ammons - You need to factor in gearing so NAV will be quite a bit lower than that. Yes probably around 94-95p sounds right.

[hugepants] 23/2/2023 07:39

Property value down 13.3% in the 6 months to end December. Given 20% LTV then NTA drops to around 94p from 115p?

[ammons] 23/2/2023 07:38

No idea why the NAV per share was not added to todays RNS?

SUPR NAV at 30 June 2022 was 115p so a 13.3% decline makes it 99.7p today.

[look alive1] 16/2/2023 08:24

Picked up 100,000 at 96.2 yesterday

[williamcooper104] 07/2/2023 18:33

Yep - a relative value trade You get interest on the collateral used for securing your short - so the short leg isn't much of a negative carry - so can go long and short similar divi yielding stocks and get a positive carry

[williamcooper104] 07/2/2023 18:31

Roughly above/around 10 in the UK is heavily shorted (though in the US shorts frequently get way above that) PHP has been 3-4 percent shorted for a long time I like a good bit of short interest - one of my US stocks has paid out half of the divi in stock lending fees

[chucko1] 07/2/2023 17:40

Happy to an extent - they had a larger short which has been cut recently. In any event, it is not clear what - if anything - was against this short.

Certainly, some HFs regarded the yield advantage of REITs over Gilts as insufficient. For the likes of BBOX, SHED, WHR or PHP for example, not a difficult call.

As for a 0.68% short, this is not a large short. Their largest position in this was a 1.53% (or so) short which is about what HFs are generally happy to go with unless there is a deep conviction, such as the one Odey had in Metro Bank (they shorted from 3500p to less than 100p with around 3.5% of the company's ords).

[nickrl] 07/2/2023 17:25

down 4.6% today will make them happy and flirting with all time low ignoring Mar20.

[jonwig] 07/2/2023 16:50

Could be part of a pairs trade: long A, short B. You just want A to outperform B, even if both fall.