London-listed Supermarket Income REIT (LSE:SUPR) announced this Tuesday that it had bought a Tesco supermarket in Bracknell, UK for £39.5 million from a client of CBRE Global Investors.
The 7.3 acre site in Berkshire, to the west of London, was developed in the early 1990’s with Tesco a long-time tenant. The asset includes a purpose-built food store and a 400-space car park. The store has several purpose-built online distribution docks, supporting Tesco’s online grocery business across the region.
The asset is being acquired with an unexpired lease term of 10 years with annual, upward only, RPI-linked rent reviews (subject to a 4% cap and 0% floor). The purchase will price reflects a net initial yield of 5.7%. The transaction will be financed with a £40 million increase of the SUPR’s existing £100 million revolving credit facility provided by HSBC.
Grocery and online have proved to be two of the few bright spots in the retail sector through the pandemic. Ben Green, Director of Atrato Capital, the investment adviser to Supermarket Income REIT, said, “This omnichannel Tesco supermarket is an excellent addition to our portfolio. The store is situated in a prime location and is an important online grocery fulfilment hub, supporting both home delivery and click and collect.”
Following the acquisition Supermarket Income REIT now holds of a portfolio of 19 UK supermarkets, with 18 in England and 1 in Scotland. The portfolio includes supermarkets from leading UK brands, Waitrose, Sainsbury’s, Tesco’s and Morrisons with a valuation as at 9 August of £739.9millon. The stores generate passing rent of £38.4 million for the REIT.
The trust also holds an interest in a portfolio of 26 Sainsbury’s stores through a joint venture with British Airways Pension Trustees Limited.