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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Supermarket Income Reit Plc | SUPR | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| 0.40 | 0.55% | 72.60 | 16:35:06 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 72.50 | 72.00 | 73.20 | 72.60 | 72.20 |
| Industry Sector |
|---|
| REAL ESTATE INVESTMENT TRUSTS |
| Top Posts |
|---|
Posted at 25/3/2024 12:03 by jg231 On the first point, they've previously pointed out that the 5.8% average valuation yield on the whole portfolio is very much that, an average. Very long leased rack rented stores are valued at tighter yields while shorter and/or overrented stores are valued at wider yields. There was a slide on it in the results presentation. This one is 12 years, so the 7% must reflect some element of overrenting.On the second, they bought this store from an institutional investor, not Tesco, so nothing to read into it regarding Tesco's thinking. |
Posted at 18/3/2024 07:52 by chucko1 PDMR purchases yet again.Nickrl, it was hardly "subtly" mentioned. It is and was pretty clear, and they indicated, rightly, that long term inflation was just under 4% if looking at inflation swaps of medium tenors. What was even clearer was that the longer term reversionary values were what led to their 12% IRR thing with feathers, and that was in the context of comparing with the TSCO bond - again instruments of medium and long tenors (2029 and 2039). In the longer term, the idea of this being inflation linked remains a reasonable statement, other things being equal. That said, they had not expected a spike in inflation, and it is notable that they are increasingly using the term "inflation correlation". But one must think longer term to achieve this, as the average lease length is long. This is perhaps why: A 13% peak inflation rate implies an average of about 9.5% over the two years surrounding that individual print. Specifically with SUPR, with a cited WAULT of 13 years, then the 55 leases suffer a lower rent by some 11.0%, and for an average period of roughly 6 years. That is a heck of a lot of foregone rent, as it is a cumulative opportunity loss. OUCH! BUT, and this is such a huge BUT, they are 100% fixed, and likely will be between 50% and 100% fixed over the long term. When they refinance, they refinance at, say, 4.5%, a one off expense increase of (50% x LTV) in the refi costs (versus 3.1% currently). Is the rent (50% x LTV = 16.5%) higher? At an average 3% (for 13 years) increase, quite clearly (being 47%). During that 13 years, the average increase is 23.5%. But after 13 years, the reversion is likely to be uncapped inflation or thereabouts. Including the experienced spike, this would average 4.5% to give a rent uplift over this longer term of 77%. So, in the short term, there will be deficits followed by medium term catch ups, depending on the from time-to-time refinancings. In the longer term, when average inflation is greater than the average refi rate increase (adjusted for LTV), the company is able to increase its dividend, and likely pretty substantially. In fact, it is still better for inflation to bust the cap, so long as you have a decent proportion of rates fixed. Further, having 100% fixed as they currently do is pretty aggressive given the nature of the underlying revenue. In theory, and over a very long time horizon, they should have close to zero fixed. But with such low rates as was the case upon starting this off, that would cause considerable short term deficits, if not long term value. All we see are projections from analysts of no more than 3 years hence, and showing divi cover of 0.98x to 1.00x etc., and still a cohort of investors who see an NAV of whatever, and therefore a discount relative to market of some other whatever. This is such a small part of a much more interesting story, and whose relevance is much overstated. The problem with a 13+ year view of things is that in general, there are so many potential confounding parameters. In the case of SUPR, these parameters are less likely to be influential - e.g. regulation and changing market trends. Another significant problem is that the success or otherwise depends on the cashflows over 13+ years, and modelling these depends on many inputs which can only be estimated, not knowing the granularity of the relettings timetable (though an average likely suffices) and making certain assumptions using the forward rates curves and inflation swaps. Concerning IRRs and other better opportunities, a 12% IRR for 13 years is equivalent to a 20% IRR for 2 years followed by a 10.6% IRR for 11 years. So if you buy GABI, you need to still be able to reinvest the proceeds at 10.6%, which may or may not be available upon realisation. Hence a portfolio with at least these two! |
Posted at 15/3/2024 12:49 by chucko1 SUPR just did 45 minutes on an Investor Meets call. They explained why they could buy sites at 7% NIY although their own portfolio is valued at 5.8% - which in itself, appears historically anomalous, relative to other property classes.Additionally, they explained why they were becomingly increasingly bullish on future rent levels for omni-channel supermarkets - in particular of SBRY and TSCO. Dividend increases in the medium term are a function of this, of course. But they are also a function of leverage, and with significant debt headroom with 7% NIYs available, it is not tricky to see a pathway to a higher dividend. They hinted strongly at moving in this direction. Once again, they mentioned TSCO bonds yielding 6% or so, whereas their own expectations of their own long term IRR at current prices was closer to 12%. Not surprisingly, Atrato folk have been buying the stock PA. As for the analysts, think of it this way: do you prefer to listen to them, or to GS alumni who own a seven figure amount of stock and are adding? Additionally, fund managers who are buying/selling are little better, if at all, than the analysts. There are risks - being higher interest rates from here and for an extended period, say 10 years. Additionally, as previously mentioned, the idea that SBRY or TSCO goes wild on leverage via PE. But even then, the quality of the sites they have would survive that. That said, where will rents be in 10 years? A lot higher, so it is not a grave danger - it would just suppress the share price for a long time. |
Posted at 13/3/2024 10:05 by nickrl Dividend not increased though which is the right thing to do but doubt it will go up at full year either as coverage still going to be marginally even with baked in NRI increases. Other thing that works against divi increase is three loans are up in Aug 24 for c97m on avg rate of 1.9% which can be refid by existing facilities but at 2.84% so thats another million on the interest bill. Also one of the part used facilities isn't fully hedged so could be more but maybe the existing hedging arrangement has already provided for full loan amount and its covered. I will try and get an answer at Fridays investor meet and also ask why they haven't used the extensions on the Aug 24 loans. Furthermore the debt slide is a bit disingenuous as it includes the commitments! so shows nothing to be repaid until 2027!!Other negative factor here has to be the clouds over Morrisons (reported 1B loss yesterday ok its paper but....) and Asda could spring a nasty surprise out the blue may take some of the shine off the longer term potential here. Anyhow in my top 3 holdings (in part because others have gone South!!) but have added a few more. |
Posted at 16/2/2024 13:11 by m_kerr Has anyone noticed the new Sainsbury's leases and purchase price on the JV assets SUPR acquired valued the assets at 7% NIY? Most of the assets in the portfolio give options for the tenants to renew for 10-30 years but in the medium term, assuming no material acquisitions will stock market investors mark down the assets?My worry is will the NIY creep up each year as the WAULT is now 13, far from the 20 years or so on the early assets acquired. Or will there be a decline in value, followed by a jump when the leases start to get regeared? |
Posted at 11/1/2024 10:37 by cwa1 Top picks in property included Picton Property Income Limited, for its low gearing and the shares offering value and superior earnings growth compared to peers, said analyst John Cahill.Last year a mooted merger between Picton and UK Commercial Property REIT (LSE:UKCM) was called off after pressure from the latter's largest shareholder. Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) was also touted by Cahill, who noted that while the shares underperformed during the rising interest rate period, with fixed income markets now pricing in a Bank of England base rate of 3.75% by November this year, “we think the shares will return to favour with investors as the conditions for interest rate cuts become self-evident”. |
Posted at 15/11/2023 18:01 by madmix "If you want to make big money, you need to buy and hold for years"A buy and hold investor in SUPR (or most other REITs) who has held for the last 5 years wouldn't have made much of a return, even when dividends are taken into account. If the story changes (interest rates, bond yields, economy, etc.) then it makes sense to act accordingly. Nothing wrong with trading. The problem is OVER trading, which is where most people go wrong. |
Posted at 15/11/2023 17:09 by igoe104 The facts are, the best investors are dead people or investors that never touch their portfolios. People constantly jumping in and out of stocks are constantly have dealing costs, and stamp duty and spreads to pay out for.The most richest investors Warren Buffet, Charlie munger, and the first isa millionaire in this country Lord Lee are all long term investors, who buy and hold. Not many traders make billions or are multi millionaires |
Posted at 21/9/2023 12:31 by chucko1 Long term, it's the reversionary value(s) which matter. Both to the presenters and myself. Whether or not they cover the dividend in this specific year borders on irrelevant.Clearly they did not get interest rates exactly right in the past 18 months, which accounts for a dividend not growing with inflation. With higher rents clearly on the horizon, lower rates in the medium term will see this back near 130p. But could take a while, though worth the wait. If it takes 5 years, you are looking at an IRR of circa 18% as an equity investor. Even at current rates (not going lower ager 5 Yeats), I see this at 100p to represent an IRR of closer to 12%. FI investors are confused - medium rates up 7bps after the non-raise of base rates. Though lower on a 1 month time frame. It is these market conditions which epitomise the randomness of rate-affected equities. Make the most of it. |
Posted at 04/5/2023 10:30 by speedsgh UK supermarket investment sector sees more activity - Following the disruption of retail capital markets throughout last year, investment into UK grocery-backed assets – which had dipped sharply in 2022 – is now showing some evidence of a cautious rebound. According to specialist retail consultancy, Font Real Estate, investor appetite for the sector still remains measured, but the first quarter of this year saw around £330m of deals on larger format stores. This figure does not include the £431m sale of assets within the Supermarket REIT and Sainsbury’s joint venture, but was still more than the total transacted during the whole of Q1-Q3 last year. Average yields on transactions in Q1 of this year were around 5.90%. Tom Edson of Font Real Estate comments: “We’re now seeing increased stabilisation across the sector, and this is bringing some investors back into the market – although concerns around increased borrowing costs and where inflation is headed remain material considerations. “However, we can see that some confidence has returned and investment transactions have responded accordingly. We’re not predicting a return to the levels achieved in 2020-2021 which saw annual deal volumes of above £1.8bn, but with pricing discovery now being reflected in increased transactional volumes, this upturn is welcome following a very challenging 2022. “What is also evident is that the pricing expectations of purchasers looking to acquire Asda or Morrisons stores is lower than that on Tesco or Sainsbury’s primarily due to the new ownership structures of the former.” “Over the longer-term, grocery-backed assets have a track record of being resilient even in times of economic stress. This was demonstrated most recently during the pandemic, and we would expect that a sector – which offers long income on large urban sites and serve a non-discretionary use – will once again be the preferred choice for many investors.” Examples of Q1 2023 UK grocery-backed investment transactions: * Project M4: acquisition of four Morrisons stores by Pimco from M&G for £110m * Asda, Hayes: acquisition by Aviva from British Steel Pension fund for £31m * Morrisons, Plymouth: sale & leaseback acquisition by Fiera Capital for £18m |
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