Supermarket Income Reit Share Discussion Threads

[bscuit] 27/3/2022 11:37

I agree with Jon and William. Plenty of reasons to be worried about the UK market and economy. The inflation protection is limited, but the underlying asset is secure. Even though I don’t currently draw down the income, it beats a bank account and is readily accessible.

[williamcooper104] 27/3/2022 08:34

Yep - I still see upside here (sainsbury JV and relative value over logistics, and cost of equity advantage over private market returns) but my main reason for holding is the income and the expectation that on a 20-40 percent bear market drawdown I'll see no more than half of that here

[jonwig] 27/3/2022 08:06

The converse argument is, how low can it go in the event of a serious bear market? If you think it has defensive qualities, it might be worth holding.

In the present situation, I'm more interested in downside protection and low beta.

[apollocreed1] 27/3/2022 02:01

I had a very large position in this since the last Primary Bid fundraise, but on Friday I thought about it and my conclusion is that it's just a property company in a safe but boring and low-growth sector, so we are really at the limit of how high this stock can go. Sold at 126.

[metis20] 26/3/2022 17:01

From the Edison research note:-

"Debt funding capacity remains for further acquisitions and the distribution of cash from SUPR’s highly successful indirect investment in the Sainsbury’s Reversion Portfolio (described in detail below) in the middle of calendar 2023 will release significant cash (we estimate £184m) for redeployment. We assume deployment will be into further asset growth, but should acquisition yields compress to a level where this no longer creates value we expect SUPR to consider alternative options, including a return of capital to shareholders."

Has the share price been held back partly by concern over another fund raise? If so the above extract may have helped to reduce that concern. Could help explain this week's share price rise.

[brexitplus] 26/3/2022 09:27

I particularly like

“Migration to the Premium Segment of the LSE, with likely inclusion in the FTSE 250 and EPRA NAREIT indices in June, and the attainment of an Investment Grade credit rating may provide access to a wider pool of investors and add to debt funding flexibility. Both should support further inorganic growth from a strong pipeline of opportunities.”;

[jonwig] 26/3/2022 06:49

Edison research note dated 21/03:

[brexitplus] 25/3/2022 16:56

On a roll.

[badtime] 22/3/2022 12:15

Sp looking perky

[chucko1] 15/3/2022 09:46

Steve Noble just bought a few. About £190k worth. Small beer for him, but I suppose he would have a good feel for the timing and level of any future raise.

At 121p or so, I am adding.

Worth noting that real yields continue to trend a little higher. Was -200bps when I last wrote, now -192bps.

[financeguru] 11/3/2022 07:47

holding up pretty well here!

[marko60] 07/3/2022 14:58

Was expecting another £100m raise to be announced after the results last week between 117-118 but I guess markets are too volatile, so took the opportunity to buy in this morning at 116 instead.

[makinbuks] 02/3/2022 09:53

Nice upgrade to NAV in the results supports recent price move. Looks like this is behaving as the diversifier I had hoped

[johnbower] 28/2/2022 16:20

I don't have a problem with a premium to NAV per se, but with so many good solid income plays sharply lower (e.g AGR, Song, PHP) and the overall market sharply lower I think the positive factors are increasingly in the price). I'm out at 123.

[chucko1] 28/2/2022 15:21

As I have argued a trillion times (more even), NAV is bordering on irrelevant. It only matters in the short run as capital is raised or covenants tested.

But I would emphasise this as I intend being a long termer (other factors willing!!).

[chucko1] 28/2/2022 15:21

As I have argued a trillion times (more even), NAV is bordering on irrelevant. It only matters in the short run as capital is raised or covenants tested.

But I would emphasise this as I intend being a long termer (other factors willing!!).

[williamcooper104] 28/2/2022 12:40

When a US REIT trades well ahead of what it can buy assets at in the private markets it raises its cheap equity to buy those assets, and create more value That's how the US mega cap REITs all became mega cap

[williamcooper104] 28/2/2022 12:24

It's not richly valued We always say that in the UK because we base it on red book/break up value - where else do you trade and invest in breakup value (other than distress) It's going concern value is it's cash flows - and they really are good Just one point - red book assumes 6.8 percent purchases costs - which is what you pay for a property asset purchase - where's we pay a spread, small broker fee and 0.5 stamp Hardly any US REIT red books it's assets; they value everything on cashflow/AFFO/FFO

[ec2] 28/2/2022 11:52

I agree the valuation is a bit rich, but there are not many places where you can get an inflation linked 4.8% yield underpinned by solid real assets and gold plated income cover.

[johnbower] 28/2/2022 10:09

Impressive performance into results. Bit too rich now in my view relative to the market.

[jg231] 28/2/2022 09:59

Whatever happens to the world order, people need to eat. Supermarket Income Reit provides one of the safest ways to access the grocery sector, while gaining a consistent stream of attractive dividends.
The company, known as Supr, acquires freehold sites occupied by all the major grocery groups and rents them out to those chains over long periods. The average lease is 15 years. Some stretch out to nearly three decades and most of the rents are inflation-linked.
These long-term agreements mean that Supr is better placed than most to withstand Putin's posturing, particularly as bosses Ben Green and Steve Windsor choose their properties with the utmost care, picking only those likely to outperform the wider food retail market over many years. Tenants include Tesco, Sainsbury's, Waitrose, Asda, Morrisons and Aldi, and the portfolio is growing steadily.
The business moved to the Premium segment of the Stock Exchange last week and is expected to join the FTSE250 index in the summer. Half-year figures this Wednesday should be strong and a 5.94p dividend is forecast for the year to June, putting the stock on a near 5 per cent yield.
Volatile economic conditions may even spur growth, helping the firm to pick up some bargain sites from freeholders in search of cash.
Midas verdict: Supermarket Income Reit was founded with the idea that boring was beautiful. So it has proved. The company has delivered capital and income growth and should continue to do so. Green and Windsor are keen to take Supr to a £2billion stock market valuation, while retaining their commitment to dividend growth. The shares, at £1.23, are a strong, defensive buy.

[williamcooper104] 28/2/2022 09:41

That's why we own SUPR If there's a nuclear war; we all get blown up richer than we otherwise would have been :) Still good to see some serious negative beta here Expect interest rate expeditions being dailed back too

[jonwig] 24/2/2022 07:10

A 4% ceiling is practical. If food prices are rising at (say) 5%, the chances are that producer prices are rising much faster, and margins are squeezed. The strength of competition will ensure that. Squeezing your tenants isn't always good practice.

[williamcooper104] 23/2/2022 23:34

Remembering pre credit crunch RBS marketing 5 year loans with 30 year interest rate swaps as a "property value derivative" - I kept asking how that would have worked out in Japan The income/credit quality lease is underpinned by solid real estate fundamentals, lots of last mile logistics locations, with low site coverage. Compared to out of town logistics assets that have minimal alternative use value and are c20 percent more expensive simply because they fit into more investment mandates