Supermarket Income Reit Share Discussion Threads

[return_of_the_apeman] 26/5/2023 10:56

I have started nibbling at 77, the ordinary buys are being reported as sells fwiw

Not overly worried if I have the bottom, the yield plus some inflation protection is too tempting

[riverman77] 26/5/2023 10:32

Rising gilt yields clearly a big factor, but I think there is also a seller out there. It turns out Mattioli Woods had been selling API and driven the price lower - a quick bit of research showed me they were also selling SUPR.

[nickrl] 26/5/2023 10:19

@riverman they do show loan data its mostly 24 or 25 but possibility to extend by 12mths so immediate refi needed and they will be flush with balance of the JV JS in July so have options. Being hammered again today wonder who wants out?

[riverman77] 26/5/2023 09:34

Last set of accounts say debt is fixed at an average 2.9%. What they don't say (or at least it's buried somewhere in the reports) is how long they are fixed for - the fact they're not highlighting this suggests it isn't long!

[m_kerr] 26/5/2023 09:13

Specto I do like to take both sides into account.....!

I believe for 2021 SUPR was responsible for around one third of transactions so yes they were playing their part in driving down yields. See the recent presentation on YouTube.

[cc2014] 26/5/2023 08:28

Interesting I did whizzed through the accounts for that information before the bell

IIRC the accounts show 2.6% for the last published set of accounts and 3.8% for the previous year. That's for what they call management fees and expenses.

I would suggest there's maybe a load load of costs which will not repeat but this is Astrato and I have the feeling there will be new costs which will not repeat!

[williamcooper104] 26/5/2023 08:24

So many reasons to leave HL; not least that their platform is much the same as was 10 years ago and you still have to calculate your CGT

[jonwig] 26/5/2023 08:11

William - quite right.

I've no idea what an "ongoing charge" is for this share. It's not an OEIC or unit trust. And your dividend comes after all company charges have been taken.

I remember HL once tried to levy charges on ITs as though they were UTs rather than companies. That's why I left them.

[williamcooper104] 26/5/2023 08:04

I wouldn't look to HL for costs - I've seen them all over the place - check out the accounts From memory gross rent to net income (excluding interest) is about 15 percent

[cc2014] 26/5/2023 07:36

If you are getting a generous 4.5% yield after costs you need to be borrowing at less than 4.5% which might have been historically possible but will be costing around 6.5% on anything that needs to be renewed.

Gearing can both be good and bad.

[riverman77] 26/5/2023 07:30

Have you factored in gearing? This will enhance the yield

[cc2014] 26/5/2023 07:21

I keep coming back to the same question.

If the yield is 6% and the on-going charge according to HL is 2.8% that leaves a 3.2% return.

OK, I can't be bothered to go and look it up but I guess if you read the accounts the 2.8% on-going charge may be higher than the long term number but even if you reduce it to 1.5% which might be pushing it you are left with 4.5%

Which makes the dividend completely unsustainable unless very many years of RPI helps out or there's capital appreciation.

[spectoacc] 26/5/2023 06:56

@m_kerr - was about to counter that by repeating what someone had posted above:

"..However worth mentioning that SUPR have been responsible for 20% of the total supermarket transactions by value since IPO"

before realising it was you :)

[Similar argument re social housing, where HOME/CSH/SOHO etc became the market].


Recall SUPR's last acquisition, just a month ago:

"..The acquisition of a Tesco omnichannel supermarket in Worcester, for a total purchase price of £38.3 million (excluding acquisition costs), reflecting a net initial yield of 6.0%."
"..Unexpired lease term of 12 years, with annual upwards only RPI-linked rent reviews (subject to a 4.0% cap and 0.0% floor."


Agree with "buy when there's blood on the streets", but are we there yet? Is a 6% asset purchase, even a safe, growing 6%, bargain territory? This was SHED's last, for eg:

"...Acquired as a collective portfolio for £39.5m at blended 6.10% NIY, all immediately income producing but all with short or medium term asset management opportunities combined with currently low rents.."


Don't hold SHED either, but Industrial/last mile currently the best sector to be in, with highest rental increases, voids matching supermarkets. Recession may change that, and benefit the latter over the former, but not convinced either's 6% is enough the way the risk-free is going. That's before getting to debt, future debt cost, coverage, running costs.

[m_kerr] 25/5/2023 22:18

a share buyback (save the 6% stamp duty and costs), to bring leverage up and cover the dividend would be the most efficient use of the disposal proceeds.

worth remembering that going from 130p down to 78p represents a massive derisking of the stock. another 40% share price fall would leave the yield at 13%, a 20% fall would leave a yield of about 9.5%. lots of negative news swirling about but you usually have to pay a high price to get a cheery consensus, when objectively the risk of losing money is highest.

[hindsight] 25/5/2023 17:42

I have always thought to control inflation resi needs to crack, mild 1990s
Amazed how well its held up but hearing of cracks and thats without the latest yield shift
Have never liked these, were swamped with retail money and feared did bad buys to use it. However that has long been discounted but will get on board if see 75p

[williamcooper104] 25/5/2023 16:43

Yep core going from 6.2 to 6.8 was the shocker Interesting that the correlation between higher gilts and higher sterling is breaking down implying recession being priced in A recession which will bring back yields/gilts

[williamcooper104] 25/5/2023 16:23

I'm at 10 percent unlevered and about 13 leveraged with a risk of a 5-10 percent divi cut when the debt refinances in a few years; a 5 percent cut is unlikely to happen as would probably just be a few years uncovered

[chucko1] 25/5/2023 16:20

They got hammered last year, whereas SUPR did not get too badly affected. It was always a risk that it might play catch-up.

IL Gilts now at a real yield of +100bps in the long end.

[riverman77] 25/5/2023 15:42

SUPR seems to be highly correlated to index linked gilts and these are getting hammered.

[cc2014] 25/5/2023 15:41

hmm. There must be some people in pain now with this one. The selling is relentless and it seems since the share price lost about 79.5p the buyers have really dried up, possibly waiting for the next psychological point 75p?

Is 78p a good price or a bad price. I really can't figure it out.

[1knocker] 25/5/2023 12:21

I bought these a good defensive bet at 100p !! How low can they go?

[williamcooper104] 25/5/2023 10:57

LGEM (must be one of largest holders of gilts) saying they won't buy long gilts won't be helping Quite why they're saying that publicly when they're vulnerable to LDI blow ups - perhaps a bit of bond market vigilantism

[cc2014] 25/5/2023 10:04

There is something we are missing here. The recent price decline is more than just a sell-off on the basis of rising interest costs.

The volume going through is too large.

[m_kerr] 24/5/2023 21:50

i believe the implied yield on the supermarkets is now about 6% which is roughly where these assets are trading at, so the trust is trading at 'market value'.

with gearing and inflation at 2-3% p/a, you get an IRR of about 10% here. i think over the 14 year weighted lease term investors will get a very good risk adjusted return. tesco and sainsbury's have strengthened their balance sheets in recent years, and will likely continue to do so.

it's a contractual income stream, from investment grade tenants who are essential, non discretionary retailers. and simple straightforward triple net leases. alot to like....!

however worth mentioning that SUPR have been responsible for 20% of the total supermarket transactions by value since IPO. it was like a successful open ended fund that buys more of the stock they hold, driving performance higher, and inflows higher still. i would not count on yield compression that was a key driver to returns in the years prior to the mini budget.