Supermarket Income Reit Share Discussion Threads

[williamcooper104] 20/9/2023 19:08

6.7 is what I had before the results

[williamcooper104] 20/9/2023 19:07

I'm taking the net debt post balance sheet As per balance sheet date your figures agree with mine

[mpage] 20/9/2023 18:20

@Williamcooper104 - thanks for that. I've am trying to replicate your implied yield fig of 7.1% from today's annual results, but can't. What am I doing wrong, please?

From AR: Annual passing rent £100.6m, Group net debt £630m

Market Cap at yesterday's close share price 74.7p = £889m

£100.6m / (£889m + £630m) = 6.6%

Even if I pencil in a crudely estimated £4m for the rent for the 2 props bought after year end, that's only 6.9%.

Please can you show me how you worked your calc?

[williamcooper104] 20/9/2023 16:35

Sure Implied yield is the contracted headline rent divided by the enterprise value of the reit - (that's its market cap plus its net debt) It's useful as it shows how much you are paying to buy properties for in the reit structure so you can compare it to private market values/transactionsBy 34 leveraged I meant the LTV

[theinquisitiveone] 20/9/2023 16:02

WC104 or Anyone!

Afternoon, I'm totally new to SUPR, so I hope you don't mind a couple of basic questions?

You mentioned the implied yield being 7.1%. What IS the implied yield? And how does it come out at 7.1%?

Also, what's "levered at 34%"? Is that just the LTV?

Thanks for any help with these basic questions!

[williamcooper104] 20/9/2023 15:08

With the de-leveraging I am now getting to an implied yield of 7.1 If you look for negatives the only potential is that while the debt and swaps are well laddered the swaped rates are v low so it's possible in 2028 that the divi is a little bit uncovered But 7.1 is v cheap; for something that's levered at 34 percent, c6x debt/ebitda but has a risk of having a slightly uncovered dividend in 5 years time Compare to PHP, implied yield 5.7x, 45 LTV and a punchy 9.6x debt/ebitda, and a dividend that's also either slightly uncovered or slightly covered

[williamcooper104] 20/9/2023 08:53

Indeed Quality assets, management and balance sheet Take Spectos point about turnover; but crucially there's no prospect of the rents getting over-rented (which is what more often than not happens with long leased CRE) So we've the prospect of genuine long term 8-10 returns Notably that the small amount of non supermarket income is all RP

[spectoacc] 20/9/2023 08:25

Everything else up c.5% on lower inflation figure of course (GPE/WHR/PSN/RDW/BLND/BDEV..).

[mister md] 20/9/2023 08:16

Up 6% so far on results - a good start - no wonder directors were buying up so many shares.

[spectoacc] 20/9/2023 07:59

Agree re recession protection, is the key thing IMO.

Average rent increase - ie only on those that saw uplift?

[chucko1] 20/9/2023 07:48

The dividend increase of 1% is hardly anything to write home about. Except, it is. This was not forecast by some of the analysts. But it is hardly inflation (even at 4%).

Do I sound negative? Perhaps, until you also consider the rent increases of 4.1% (more than the average cap was not unexpected) and the fact that turnover has increased far more is hardly a negative. Overrentedness is a virus this REIT is unlikely to suffer from and if, like me, you are in this for the long haul, then that's OK.

Added to all this is the plateauing (at worst) in inflation (number just out), and the maths of this REIT get compelling if this continues at even a moderate pace.

Importantly, if there is a recession, this REIT is increasingly defensive as a function of its much lower ratio of rents to sales.

I think this has more likelihood of surprising to the upside when it is less regarded as a bond proxy. By that, I mean a fixed rate bond proxy rather than a linker proxy. Not to a massive extent (the rise), but the difference between the two bonds is huge with real rates at a sensible level rather than the madness of a year or two back. OK, dividends rose by a paltry 1%, but it's the right direction of travel with current levels of inflation. And as rates and inflation temper, the higher rents, albeit at 4.1%, are baked in. It will need a rate/inflation re-turnaround to frustrate this, I think.

[spectoacc] 20/9/2023 07:28

I found this a bit painful:

"Supermarket store revenues growing much faster than rents, improving affordability and rental values"


Revenues aren't what matters.

[wish i wasnt in rbs] 20/9/2023 07:21

Results look good. (To me anyway)

[jg231] 18/9/2023 14:39

There is an Investor Meets on 21 September with Steven Noble presenting:

[nickrl] 15/9/2023 16:55

Of the two loans redeemed/cancelled only the Canada one was drawn (62m) at last update. Of the HSBC RCF only 96m of the 150m was drawn. With the replacement facilities looks like they've used c45m of the JV cash to lower debt although the change in LTV suggests more. The two hedges were 1.12 & 1.65% so were well in the money be nice to know what they got hopefully all will be revealed in results next week.

[chucko1] 15/9/2023 08:13

... and with "accordion" option to increase.

It looks to me as though they have used the shape of the yield curve (lower forward rates) to lessen the future hedging and net income risk. It is also worth commenting that they were former capital markets people, and not real estate people.

Just saying.

... and the share price rallies a little on this, although it was staring all investors right in the face. The ability of SUPR to manage their balance sheet in an intelligent manner, as well as the underlying collateral, is a reason why this is my largest holding.

[williamcooper104] 15/9/2023 07:39

Yep Looks like a credit spread reduction and term out exercise

[rik shaw] 15/9/2023 07:14

Debt refinancing update looks prudent:

[mister md] 30/8/2023 12:31

Quiet on here. I've added a few more today, mainly on the back of all the recent director buys and the fact the dividend yield is now almost 8%.

[1knocker] 01/8/2023 01:56

Have you doubled up, or doubled down? Time will tell. I don't know - seemed cheap at the time when they were 110! I'd love to see that again, but I am not holding my breath!

[sharesoc] 31/7/2023 00:15

ShareSoc is hosting a webinar with Supermarket Income REIT (SUPR) on 11 October 2023 which may be of interest to current shareholders or potential investors. Steven Noble and Robert Abraham (Atrato Group) will be presenting. You can register here:

[williamcooper104] 28/7/2023 15:49

M&G sold two supermarkets - Tesco in Cardif and Sainsbury's in Wigan WALT 14.5 NIY almost 7Not sure what the rental uplifts are and what land area they occupy

[chucko1] 28/7/2023 11:13

I would certainly be in the latter camp. Timing it is never easy and might get you around 5% of additional value. But given that you are an intended holder and see significant value here, why bother about a risky 5% in the context. of, say, an expected bull-case price of 100p in 2 years, say. In which case your return is 24p + 12p of divs = 36p - a return of some 47%.

The 5% is risky as you may get the timing wrong and have to chase the market higher - against the chance of increasing the return from 47% to around 52%.

If the share price were nearer to 85p, the risk/reward of timing changes, but is still far from compelling (at all). And also, as we know, people overestimate their ability to time the market. That said, on a few occasions, there are some better entry points as certain holders panic.

[adamb1978] 28/7/2023 11:00

Hi Nimbo1,

Agree, and we won't see a change in trend til interest rates come off. The market implied BoE rate is for another 100bps of rises. I just dont see that happening - 25bps next week and possibly another in Sept, but think we're going to see inflation falling fast in the coming months.

A reassessment of peak interest rates will cause an uplift in these and similar things. Question is whether you try to time that, or just hold and wait. Personally I'm in the latter category.

Adam

[nimbo1] 28/7/2023 09:51

The interesting thing is for me it seems cheap - but it can be expensive to argue with the markets opinion. And none of these things have seen a decent enough bounce to suggest any chance of a trend change. Best we can hope for is perhaps flatlining.