Supermarket Income Reit Share Discussion Threads

[mindthestash] 25/11/2024 13:32

Report in telegraph online today. Large supermarkets business rates to be lifted alongside online warehouses. A damper on rents perhaps in a period of uncertainty

James Murray, exchequer secretary to the Treasury, said there would be a higher tax rate on the most valuable 1pc of business properties in the country, adding: “This will capture the majority of large distribution warehouses, including those used by online giants, as well as other out-of-town businesses that draw footfall away from high streets.”

A spokesman for the Treasury said: “We are committed to creating a fairer business rates system that protects the high street, supports investment, and is fit for the 21st century.

“In the Budget, we delivered on the Government’s manifesto commitment to reduce the business rates burden faced by the high street and from 2026-27 will introduce permanently lower tax rates for retail, hospitality and leisure properties, including those on the high street.”

The suggestion that Aldi and Lidl could be in a stronger position following the business rates shake-up comes after years of major expansion for the two German discounters.

[8gggggggg] 25/11/2024 09:06

M.Kerr.Exactly my point.....SUPR. portfolio is absolutely and completely unique, I do NOT understand why they want to dilute it.Getting planning permission for new super store is almost impossible.Existing stores have advantage if/ when redeveloped , will do with 100,s of flats above them.and make. gigantic profit.....Dakas.

[m_kerr] 24/11/2024 20:45

Near 9% yield now - cheap as chips.

Lidl and Aldi are much more flexible on where they are located. They'll take 10-15k units in retail parks and as tenants arent as sticky as the big 4. SMaller footprints so they can open new stores despite the lack of land in cities.

They've barely built any supermarkets of the sort SUPR owns in the last 20 years (or shut any), so supply is fixed. Any available 5+ acre plot is going to be housing nowadays.

[laurence llewelyn binliner] 24/11/2024 09:57

#Ramellous, thanks for your input, looking at building a position inside the ISA for exactly that reason..

Current considerations have been EBOX/BBOX and SUPR which is standing out for the yield at 69/70 pence, refinancing costs weighing heavy on the share price as debt gets rolled over into a potentially higher for longer environment..

Looking at a 10 year holding strategy giving it room for some CG if/when rates cool off as well as the income, dividend sustainability and growth potential being the key drivers through strength of the company and the leadership of it..

[ramellous] 24/11/2024 09:46

There are no fees for you to pay when you are holding shares in SUPR. The fees you are seeing are normal management fees for running the business. The dividend shown is the dividend you get. The only thing you might pay is tax on REIT income if it is paid as a PID dividend if you are using a standard trading account. REITs are better held in a ISA or SIPP for the tax free wrappers.

[laurence llewelyn binliner] 24/11/2024 08:41

Trying to make sense of the Trust fees here to hold, the latest KID sheet shows costs to holders reset to zero, however putting a dummy trade through Smart Investor the costs are coming in at ongoing fees of 2.36%, are Barclays taking the pi55 or is that correct..?, the yield is strong at the current share price but giving away 25% of stinks nearly as mush as the 30% WHT on US income.. :o)

Are any current holders able to advise on what the SUPR fees should be here, do they vary across different platforms..?

[cwa1] 22/11/2024 16:21

AGM Notice and S/H Resolutions

[stangunner] 22/11/2024 14:59

That Halesowen store is a dog, not at all comparable to a Sainsbury’s like Huddersfield. My understanding is that it spent three years on the market before LXi bought it. It's got no land with it (check Google Maps) because the car park is on top, so little value for residential re de development.

[williamcooper104] 22/11/2024 09:45

Lidl/aldi stores don't have 8-10 acres of land, carparking plus petrol sales For sure 11 years income at >7 means there's over renting - but that actually gives a greater exposure to market rents which works well at a portfolio level - equally if in 9-10 years time the income on this asset takes a hit then the other assets are now likely to be under-rented so can take the slack

[ghhghh] 22/11/2024 07:55

Shore Cap say this is higher rental than rest of portfolio and this is reflected in the higher yield.

And in my experience Sainsburys store are better located than Lidl stores.

[8gggggggg] 21/11/2024 10:22

Bond holder makes very very important point...This property renting biz, not as easy as it looks ...These guys are up with best in UK....UK.France is a whole new ball game and learning curve.... . They have already been distracted and missed the fantastic Halesowen deal.... and went for Second. best Sainsbury's deal early this week..Dakas.Dakas

[bondholder] 21/11/2024 04:05

The implied passing rent on the Sainsbury purchase is around £33 PSF. Lidl are signing long leases for £12 to £19 on new build stores and many items have to price match due to competitive pressure. Wages and utilities etc are similar for all operators. Is the old metric of rent at 4 percent of turnover still applicable in a world of compressed retail margins ? Might the over renting be far worse than expected? Why don't SUPR provide a detailed analysis of this in their reports?

[williamcooper104] 20/11/2024 18:13

I don't see it as a likely take over candidate either The US net lease REITs all have a higher cost of equity now, and PE could make it work at the current share price but not with a material premium that they'd need to pay I'm happy with that - I've had my fun with API/EBOX/BPCT/GABI (less fun with DGI9 :) and hopeful with ASLI and RESI So happy to hold here - returns from winding up trades need to go somewhere

[spectoacc] 20/11/2024 15:58

Thanks @speedsgh.

[speedsgh] 20/11/2024 13:55

@nickrl - yes, was aware of RPI collars/caps. i just stumbled across the data in the 2024 annual report so thought i would post on here for ease of reference in future.

[chucko1] 20/11/2024 13:48

Nickrl, even if it was not to recover and was at, say 62p, then 15% below a reduced NAV of 90p - so 76.5p - would represent a 26% total return from the current level.

I certainly get your point, but I do not use historic cost (and I have lost a little bit here even including dividends) as a decision input and so this return calculated above should provide some comfort against your concern.

I do not think SUPR is a likely takeover candidate, and would not agree to a lowball price most likely.

[nickrl] 20/11/2024 13:47

@speedsgh most leases on RPI are capped at 4% pa so we wont get a big boost on anything due a 5yrly review over next few years but could be be some 10-15% plus uplifts.

[8gggggggg] 20/11/2024 13:44

Apologies for disagreeing again.1..Blackrock are selling (. like I should ). as they quite rightly distrust this distracting European adventure.2...Check out the ASDA. Site in Hallesown .A..Next door to Cornbow shopping centre..B. Located in prime residential area so suitable for redevelopment for expensive houses.if ASDA fails.Dakas.

[speedsgh] 20/11/2024 13:07

SUPR income mix by rent review type - indexation (30/6/24):

RPI 70%
CPI 6%
ILC 4%
Fixed 2%
OMV 18%
Total 100%

SUPR income mix by rent review frequency (30/6/24):

Annual 58%
5 yearly 41%
7 yearly 1%
Total 100%

[nickrl] 20/11/2024 13:01

Others have plenty of debt that needs refi over next 18-24mths but aren't being bashed down as much and its not as if supermarkets aren't going to be needed. Had loaded up on several occasions this year already but even a 9% yield on current purchases makes me weary that once these reits get pushed down they never recover and then get sold off too cheaply.

[speedsgh] 20/11/2024 13:00

Agreed, the less exposure to Asda & Morrisons the better imo

Exposure by valuation (30/6/24):

Tesco 48%
Sainsbury’s 29%
Morrisons 5%
Waitrose 4%
Carrefour 4%
Asda 2%
Aldi 1%
M&S 1%
Non-food 6%

[chucko1] 20/11/2024 12:59

CC, I would say that a lot of what you wrote in #2391 is bang on the mark. However, if you are going to make what is tantamount to an interest rate play, recall that Ben Green and Steve Windsor are more experienced in this field than ANY OTHER REIT manager.

But it is not interest rates on their own, but rather, the relationship between relevant inflation and interest rates. In that respect, we have moved since 2022 from long term inflation yields (SUPR mimic this) rising from -250bps (quite absurd) to +125bps or so. Ceteris paribus, that has rerated SUPR from very expensive to pretty cheap. Cheap things can get cheaper, but my own inflation and IR projections (using today's curves, and I have been doing this for ages prior) indicate that dividend cover will be tight but >1.0x, and incremental measures such as market value management fees and in-house service provision as well as increasing yield spreads via EU purchases reflects equal concern from management. However, I see c. 9% as excellent compensation for this blend of long-term risks/opportunities.

On this issue of Blackrock's variation in holding, I would read literally nothing into that. It could arise from a variation in a short or modification in a third party total return swap, whether referencing SUPR or perhaps an index including SUPR - or one of a hundred other reasons. Blackrock tend to act as a lender of stock on many issues, simply because they are bound to be long term holders in order to hedge their sales of index-linked products and other relevant securities.

[garbetklb] 20/11/2024 12:21

With regard to the "missed ASDA opportunity", I'm not sure I'd be v happy to increase exposure to ASDA.......

[williamcooper104] 20/11/2024 12:20

Remember that in an inflationary environment unlike many commercial property types - SUPRs assets will see market rental growth - so the chances that come regear that 7 plus yield can be maintained are greater - and with a new long rack rented lease you'll likely see some capital growth

[williamcooper104] 20/11/2024 12:18

Per Tescos - every little bit helps You could have raised equity that was accretive but it would have been short term dilutive to divi cover - so would have gone down as well as the last budget