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Supermarket Income Reit Plc

2.80 (3.52%)
Share Name Share Symbol Market Type Share ISIN Share Description
Supermarket Income Reit Plc LSE:SUPR London Ordinary Share GB00BF345X11 ORD GBP0.01
  Price Change % Change Share Price Shares Traded Last Trade
  2.80 3.52% 82.40 7,650,461 16:35:12
Bid Price Offer Price High Price Low Price Open Price
81.90 82.10 82.20 80.10 80.20
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Real Estate Investment Trust 74.45 110.30 8.90 8.84 1,023.93
Last Trade Time Trade Type Trade Size Trade Price Currency
18:00:55 O 22 82.40 GBX

Supermarket Income Reit (SUPR) Latest News (1)

Supermarket Income Reit (SUPR) Discussions and Chat

Supermarket Income Reit Forums and Chat

Date Time Title Posts
02/6/202307:10An income play1,541

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Supermarket Income Reit (SUPR) Most Recent Trades

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Supermarket Income Reit (SUPR) Top Chat Posts

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Posted at 26/5/2023 06:56 by spectoacc
@m_kerr - was about to counter that by repeating what someone had posted above:

"..However worth mentioning that SUPR have been responsible for 20% of the total supermarket transactions by value since IPO"

before realising it was you :)

[Similar argument re social housing, where HOME/CSH/SOHO etc became the market].

Recall SUPR's last acquisition, just a month ago:

"..The acquisition of a Tesco omnichannel supermarket in Worcester, for a total purchase price of £38.3 million (excluding acquisition costs), reflecting a net initial yield of 6.0%."
"..Unexpired lease term of 12 years, with annual upwards only RPI-linked rent reviews (subject to a 4.0% cap and 0.0% floor."

Agree with "buy when there's blood on the streets", but are we there yet? Is a 6% asset purchase, even a safe, growing 6%, bargain territory? This was SHED's last, for eg:

"...Acquired as a collective portfolio for £39.5m at blended 6.10% NIY, all immediately income producing but all with short or medium term asset management opportunities combined with currently low rents.."

Don't hold SHED either, but Industrial/last mile currently the best sector to be in, with highest rental increases, voids matching supermarkets. Recession may change that, and benefit the latter over the former, but not convinced either's 6% is enough the way the risk-free is going. That's before getting to debt, future debt cost, coverage, running costs.

Posted at 25/5/2023 22:18 by m_kerr
a share buyback (save the 6% stamp duty and costs), to bring leverage up and cover the dividend would be the most efficient use of the disposal proceeds.

worth remembering that going from 130p down to 78p represents a massive derisking of the stock. another 40% share price fall would leave the yield at 13%, a 20% fall would leave a yield of about 9.5%. lots of negative news swirling about but you usually have to pay a high price to get a cheery consensus, when objectively the risk of losing money is highest.

Posted at 25/5/2023 15:41 by cc2014
hmm. There must be some people in pain now with this one. The selling is relentless and it seems since the share price lost about 79.5p the buyers have really dried up, possibly waiting for the next psychological point 75p?

Is 78p a good price or a bad price. I really can't figure it out.

Posted at 23/5/2023 20:50 by 1c3479z
too busy taking on assets and loans, since presumably their management fees are linked, to pay much attention to the share price?
Posted at 24/4/2023 08:35 by cc2014
I tried to make sense of this.

Tesco 2033 bonds (31CM available in retail denominations) are currently paying 4.86%

SUPR are getting 6% on this plus some RPI increase.

SUPR management fee is 1.3%, other costs to manage the fund take this up to 1.86%. If you include the debt costs this rises to 3.16% (although HL show 2.8%)

SUPR NAV was 92p at December but we know will be lower now. I have to guess a number. I'm guessing 89p.

I kind of want to take the actual return on this investment to be 6%-3.16% = 2.84% at the shareholder level but of course I'm not paying 89p, I'm paying 84p as SUPR is trading at a discount. I guess you could argue for using the 1.86% for costs but there again you could argue for an even higher number than 3.16% based on the incremental cost of debt on the RCF.

However I cut it the dividend is uncovered on this investment until a bunch of RPI increases come through after the costs of running the fund.

I'll pass.

Posted at 24/4/2023 07:16 by cwa1
Acquisition of a tesco in worcester for GBP38.3 million

Supermarket Income REIT plc (LSE: SUPR), the real estate investment trust providing secure, inflation-linked, long income from grocery property in the UK, announces the acquisition of a Tesco omnichannel supermarket in Worcester, for a total purchase price of GBP38.3 million (excluding acquisition costs), reflecting a net initial yield of 6.0%.

Tesco has been operating at the 6.5 acre site for over 30 years. The site comprises a 47,297 sq ft net sales area supermarket, a petrol filling station and 515 car parking spaces. The store is also an online hub for Tesco operating nine home delivery vans and a Click & Collect facility. The store is being acquired from British Steel Pension Fund, with an unexpired lease term of 12 years, with annual upwards only RPI-linked rent reviews (subject to a 4.0% cap and 0.0% floor).

The acquisition is being funded from the first tranche of sales proceeds of the Company's stake in the Sainsbury's Reversion Portfolio (the "SRP").

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

"This acquisition further strengthens SUPR's portfolio of top trading omnichannel supermarkets, evidencing our ability to redeploy the proceeds of the SRP sale at yields which are accretive to the portfolio."

Posted at 22/4/2023 12:27 by riverman77
I'd say SUPR looks very good value right now - personally wouldn't pay too much attention to the NAV as I think supermarkets themselves are undervalued (thus the NAV understates its intrinsic value - Tesco and Sainsbury themselves know this and are buying back their stores. Supermarkets used to trade at a premium to the wider property market because of the quality of the cashflows - they now trade at a discount which doesn't seem to make sense}.
The key point is the yield. Obviously there are higher yields available, but these are generally poor quality assets. I think 7% is attractive for SUPR given it should be extremely resilient, and long-dated, inflation-linked rents are usually sought after (yes I'm aware there are RPI caps but this would only be an issue if we have years of 10% inflation - if inflation stays elevated then more likely it settles in the 4-5% range, in which case SUPR should capture most of RPI).

Posted at 05/4/2023 11:55 by chucko1
What is below was written by the analyst at Shore Capital on or about March 30th. This morning, Shore Capital published a SELL notice on SUPR.

Anyone care to join the dots??

It cannot be interest risks alone as the same analyst has BUY notices on the warehouses and actually on RGL and AGR.

Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) results were “resilientR21; and while the grocery market is currently under pressure from squeeze on the UK consumer, the “long-term fundamentals look appealing”, broker Shore Capital said.

Interim results from the real estate investment trust showed EPRA earnings of 2.9p per share, which Shore Cap noted was a shade below its 3.0p forecast.

The dividend was maintained at 3.0p per share, which was in-line with estimates.

SUPR had already reported that the direct portfolio valuation declined by 13.3% to £1.625bn over the half-year period, representing a net initial yield of 5.5% and translated into an EPRA net tangible assets of 92p per share, down 20% from 115p reported from last June.

“This fall in valuation is consistent with the trend across the sector (to a greater or lesser extent) and is a direct consequence of the outward movement in bond yields and re-pricing of real estate risk in response to the autumn mini-budget,” said Shore Cap analyst Andrew Saunders.

A partial consequence of the fall in valuation and increase in drawn debt, saw the loan-to-value ratio increase to 40% from 19%, although this will reduce to below 30% in the second half following receipts of proceeds from agreed disposals.

“The UK grocery market remains structurally robust with a constrained supply of high-quality superstore assets. While the trading environment is currently challenging due to compressed volume demand from a squeezed mass-market consumer and operating cost inflation, the long-term fundamentals look appealing in our view,” Saunders said.

“We like the investment proposition with SUPR and believe there are appealing long-term attractions with the scaled ownership of UK grocery assets.”

He plans to trim his full year NTA forecast closer to 90p, suggesting the stock is trading on around a 4% discount, “which looks fair in our opinion”.

Analysts at Liberum noted the outlook statement remains optimistic, citing strong operator performance, and that supermarket yields now fully reflect current economic conditions, though supermarket property values have declined at sharper rate than the MSCI All Property Index during 2023.

Posted at 08/3/2023 14:18 by chucko1
Thinking of the long term, and referencing the comment of CBRE on the AIRE board, the principal concern I have with SUPR is with its credit risk via exposure to a weak tenant, although that is quite minor currently.

The long term is to do with the long term rate of inflation and the level that this is capped with versus where they have fixed their debt, and where we are likely to be in the interest rate cycle. Mixing these all together, the fact that inflation is 10% and seemingly on a path to between 2.5% and 6% within around a year - depending on which version of the economic bible you believe in (each written by one particular Nobel Laureate or another) - suggests the issue of not being "inflation-linked" is overly harsh.

We have seen that other uncapped leases have not had the full inflation rise thrown at them, voluntarily. This is a function of inflation being entirely out of kilter with the risk free rate and a general view that these will be more aligned once the current responsible shocks have abated. There will, in my opinion, be aftershocks, but as with most feedback-type systems, of diminishing effect through increasing time.

If SUPR had had to fix at, say, 5% with caps at 4% average and 5% inflation, it would be a different story. But for now, all the properties remain miles away from being over-rented and that is clearly of long-term importance and value.

So what of this CBRE comment? They believe that spreads of commercial property to the risk free rate will diminish. I believe that one should also add to this "for good quality assets". By comparison, if we consider the high yield bond market the past year as rates have risen, the spreads between these HY bonds and UST initially rose (as higher rates are inherently problematic for HY companies) but after a while, these spreads have decreased again and recently, HY debt has outperformed IG debt. In so many other markets, we see this sort of behaviour. A CCC company, when UST are, say, 2% might yield 6%, so a spread of 400bps. Many investors will only buy CCC debt at some floored yield which accentuates the high spread, [like Japanese investors historically going on buying strikes with yields lower than a certain nominal level]. UST goes to 4% and initially panic takes the CCC debt to 10%, so now a spread of 600bps. But then the process of differentiation takes hold, and certain of the HY come right back to as low as 300bps spread or perhaps even tighter. The reason for this is that the original spread of 400bps was too wide, but it was like that because there was a requirement by many investors for no lower than some target rate to own this stuff.

In its early life, SUPR was at some 750bp or so over Gilt linkers. The latter have blown up, rightly so and as often written about on this very board (notwithstanding the quite absurd rants from Pete). They are now some 300bps wider AND SO IS SUPR by around 250bps. This is how hedge funds look at these things - spreads - but they have no experience of how real yields move in the rate environment we are currently experiencing as it has literally never happened before in this fashion. Real yields have been on a one way march from circa 400bps to -250bps the past 40 years (well, until a year ago), before which there may have been 3 or 4 hedge funds in the entire world. Literally. And all they did was currencies and rates. Think Julian Robertson and our opinionated Hungarian friend.

Where people go wrong in making/executing such a claim as I do above, is to move foolishly down the curve of quality. For instance, the yield on LLOY UT2 debt in 2009 was 13% and up to 15% on BARC T1 debt. HSBC, even, was 11% for UT2. And then some Irish banks were at 17% and one or two German banks at around the same level, which enticed people to buy these latter higher yields. Obvious what happened after that. In other words, stick to the decent quality and the spread contraction in higher risk environments can be allowed to play out. In my opinion, this will come to pass with SUPR which touched 7% with practically inflation-linkage this morning.

I would prefer to place my bets here at 7% than 8.5% with AIRE, although I do have a few of the latter (less so after this morning).

Posted at 23/2/2023 07:44 by frazboy
You need to adjust for the debt? NAV/share down perhaps 17% ish?

From Edison’s recent report:

‘Our previous assumption, and we stress assumption given the level of uncertainty, was that the valuation yield on SUPR’s portfolio would increase by c 35bp from the 30 June 2022 (FY22) level of 4.6%. We now assume a 50bp increase during FY23 (an implied c 6% reduction in property values) and for yields to drift higher over the following two years, reaching 5.25%, as capital values fail to fully keep pace with rent growth.’

If I understand correctly todays announcement says the valuation yield is now 5.4%

The reason for the recent share price weakness is now evident. Valuations have been reduced more than may have been expected. I’m assuming the dividend is sustainable - any one have any comment on that, nickrl?

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