Supermarket Income Reit Share Discussion Threads

[chucko1] 30/9/2022 09:34

And don't forget - these people are far from stupid. If anything, this should have gone up the past few weeks.

I am sticking to my thesis that higher rates, so long as not entirely divorced from inflation (very unlikely looking at recent events), is a net positive for SUPR. The dampener, as ever, is the risk premium desired by investors on account of the otherwise batterings being administered. So I think it will take time for this to find a higher plateau.

... and don't say I didn't write about the risks of the Gilt (linker) market!! The longer dates are still expensive, although the shorter dates are now interesting and I have bought a few.

[mister md] 30/9/2022 08:00

and another ... ;-)

29 September 2022

Supermarket Income REIT PLC, announces that on 29 September 2022, Frances Davies , a Non Executive Director of the Company, acquired 24,774 Ordinary shares in the Company ("Ordinary Shares").

[mister md] 29/9/2022 08:54

and another ...

29/9 RNS
"Supermarket Income REIT PLC, announces that on 28 September 2022, Nick Hewson, Chairman and Non Executive Director of the Company, acquired 67,500 Ordinary shares in the Company ("Ordinary Shares")."

[epicsurf] 28/9/2022 22:32

Master investor
With the shares now trading at around a pound the target dividend of six pence gives them a prospective yield of six percent, which is fully covered by earnings and benefits from a significant element of inflation-linkage. The latest pro forma EPRA NTA of 111 pence puts the trust on a discount of 10% that looks attractive given that it has been trading at an average 12-month premium of 10%.

Positive fundamentals

In the accounts to the end of June the fund achieved like-for-like rental growth of 3.7% with 81% of the leases being inflation-linked, albeit with caps and floors. Of these, 73% are linked to the higher Retail Prices Index (RPI) and eight percent to the Consumer Prices Index (CPI), with two percent subject to fixed reviews and 17% to open market rent reviews.

The broker Winterflood says that this high level of inflation-linkage is particularly appealing given the current inflationary backdrop, while the rental uplift caps, which average four percent, ensure that the rents remain affordable for tenants. In fact, the underlying supermarket sales growth is now outpacing contractual rental growth, which makes the rents even more affordable.

Despite the inflation-linkage and the healthy growth in rent and EPS, the dividend was only raised by one percent to 5.94 pence, with the target dividend increased by a similar amount to six pence per share. This is clearly disappointing for investors, although the caution is probably warranted in the current environment and the prospective six percent yield remains attractive, especially as it is fully covered by earnings.

The debt is fully hedged

The managers have taken the decision to fully hedge the drawn debt to achieve an effective fixed rate of 2.8% until 2026, which gives the fund a conservative pro forma loan to value ratio of 31%. In the current economic environment this looks like a sensible move and should enable the fund to benefit from both the level and predictability of earnings going forward.

During its last financial year the trust was able to successfully raise £506.7m of new equity via two upsized and oversubscribed share issuances, which shows the level of demand for this unusual asset class. It also continues to expand its portfolio with a further five assets purchased for £216.1m post period end.

Winterflood expects SUPR to continue to deliver strong total returns over the coming years on account of its focus on omnichannel stores, which ensures that it benefits from the structural trend of online sales growth. They also point out that the non-discretionary nature of grocery demand means that the sector is likely to prove resilient in the current challenging macroeconomic environment

[income investor] 28/9/2022 18:29

I see a non-exec director made a well timed purchase today at 92p. Only bought £20k worth, but good to see director buying!

[williamcooper104] 28/9/2022 17:42

I got it wrong - the 2068 isn't the dot com gilt It's the crypto gilt

[chucko1] 28/9/2022 16:19

It helps when the 68 linker DOUBLES IN PRICE in a couple of hours.

[jonwig] 28/9/2022 16:08

I added some this morning before the BoE statement, though not a confident amount.

I sense these policies are being minced through the Ernest Hemingway machine: slowly then all at once.

[williamcooper104] 28/9/2022 09:34

Remember our Special Fiscal Operation will eventually become a Full Budget MobilisationSo plenty more muppet show

[williamcooper104] 28/9/2022 09:25

Yes - conspiracy => competence

[chucko1] 28/9/2022 08:49

It's an opportunity!! It will cost a few bruises first, though.

[earwacks] 27/9/2022 20:38

Quite clearly this is a deliberate exercise by the ruling classes. They made a shed load out of the pandemic now they want to really clean up

[williamcooper104] 27/9/2022 17:59

I think it's about 70 percent of all mortgages reprice before the next election - ooops Tory MPs need to decide if they want to just lose an election or lose any chance of being in power for a generation

[jonwig] 27/9/2022 17:27

Those party members who voted enthusiastically will be looking aghast at their portfolios right now (and some at their mortgages). MPs are already in mutiny mode.

Maybe the best investment is a small punt on Betfair?

[williamcooper104] 27/9/2022 17:08

It's all very interesting There's got to be about a 100bps premium - the idiot premium for our fiscal event clown show government The worse things get the greater the chances of a 1922 coup and a bit of sanity being restored Always thought yields would rise but didn't quite expect us to have higher yields than Italy and Greece

[williamcooper104] 27/9/2022 17:06

A friend just got quoted 800bps for a commerical property loan

[chucko1] 27/9/2022 16:57

Not that precise, after all. RECI has been one of the better falling knives. The short duration and reasonable underlying LTVs (and only 50% of the properties being UK) meant the falls alongside BBOX, SHED, PHP and SUPR (though the latter is now dirt cheap) was unnecessary. Understandable though, I suppose.

[chucko1] 26/9/2022 13:53

Indeed - but fears they were comfortable with on Friday.

They must have very precise models!

[williamcooper104] 26/9/2022 12:38

Think RECI falling is likely fears over credit losses

[chucko1] 26/9/2022 12:15

Yup - just bought a few more of those exact things. Still want to keep the duration short, but creeping a little further out. Even 1 year has been a risky proposition of late.

Worth considering that SUPR will see the effects of inflation gradually come through in the next few years as leases gradually reprice (for inflation). They have fixed on the liability side for 4 years. So even if rates have not abated by then, the inflation effects will be coming through and so they re likely to retain the margins they currently have. In the mean time, I expect the margins to increase.

But, as we have seen with RECI this morning, logic is playing a small part for now. It has a 2ish year average life on its lending, so its 7 point move this morning implies a yield adjustment of hundreds of basis points. And yet no movement at all on VSL. Or SUPR this morning (at least).

I expect that buying certain things now will be rewarding, but not if you are not prepared to stick with it for longer than one is usually used to doing.

Think of it - negative real rates for years. How did anyone NOT expect it to end in tears?? Only QE kept the bubble inflated.

[return_of_the_apeman] 26/9/2022 12:03

Think Gilts have blown up, they may fall further, but I guess the question is whether the extra yield here is worth the risk which may have explained why SUPR has fallen

TREASURY 0 1/4% TREASURY GILT 31/01/25 (TN25) - YTM 4.7%

[mister md] 26/9/2022 10:31

Well the chairman purchased 1/2 million's worth at 117p a couple of months ago, so I finally decided to add to holding at 102.75p this morning ...

[williamcooper104] 26/9/2022 07:55

Timber Pound got down to 1.03 Gilts gonna blow up again today Can see this ending now in KamiKazi and Truss getting 1922d

[cwa1] 26/9/2022 07:28

And one form SUPR themselves:-

Acquisition OF A TESCO SUPERMARKET IN BRISTOL

Supermarket Income REIT plc (LSE: SUPR), the real estate investment trust providing secure, inflation-protected, long income from grocery property in the UK, announces the acquisition of a Tesco supermarket, an Iceland Food Warehouse and complementary non-grocery units in Bradley Stoke, Bristol, for a total purchase price of GBP84.0 million (excluding acquisition costs), reflecting a net initial yield of 5.6%.

The 19.8 acre site includes a 74,717 sq ft net sales area Tesco supermarket with a 16-pump petrol filling station and 925 car parking spaces. The store is an online hub for Tesco, operating 20 home delivery vans and a dedicated Click & Collect facility. Tesco has operated at the site since the 1980s and through an extensive refurbishment, expanded the store in 2007. The site also includes an Iceland Food Warehouse and further complementary units providing convenience and health services with tenants including Boots, Greggs, Costa Coffee and Pets at Home.

The site is being acquired from CBRE Investment Management. The Tesco store has an unexpired lease term of 14 years, with annual, upwards-only, RPI-linked rent reviews (with a 3.5% cap and a 0.0% floor).

Ben Green, Director of Atrato Capital Limited, the Investment Adviser to Supermarket Income REIT plc, said:

"We are very pleased to be adding this top trading omnichannel Tesco store to the portfolio together with the complementary essential retailers at this site."