UK-based Supermarket Income REIT plc (LSE: SUPR), announced today that it had exchanged contracts on two supermarkets. The supermarkets acquired by the specialist real estate investment trust include a Sainsbury’s supermarket in Melksham, Wiltshire, and a Waitrose supermarket in Winchester, Hampshire. The properties were acquired from LaSalle Investment Management for £64.8 million, representing a combined net initial yield of 4.4%.
Both supermarket assets include facilities for enabling distribution of goods ordered online (an essential feature in the current pandemic-impacted market).
The Sainsbury’s store was developed in the 1990’s and subsequently extended and refurbished in 2011. The 9-acre site includes a 47,000 sq ft supermarket, a petrol filling station, 290 parking spaces and purpose-built online fulfilment distribution docks, which support Sainsbury’s online grocery deliveries across the region. The store comes with an unexpired 17-year lease, with annual, upwards only, RPI-linked rent reviews (subject to a 4.0% cap and a 1.0% floor).
The Waitrose facility was built in 2009 and includes a 25,500 sq ft omnichannel supermarket with 180 parking spaces. In addition, 4 residential apartments, a GP medical centre and 4 ancillary units are included in the purchase. The Waitrose store has been acquired with an unexpired lease term of 24 years, with 5-yearly, upward only, RPI-linked rent reviews (subject to a 3.3% cap and a 1.0% floor).
The acquisitions are expected to complete in the coming weeks upon the completion of property related due diligence.
In an announcement issued by the REIT, Ben Green, Director of Atrato Capital, the investment adviser to Supermarket Income REIT, commented, “These two supermarkets are excellent additions to our portfolio. The lease lengths at 17 years and 24 years respectively are accretive to our portfolio WAULT of 16 years, whilst adding another Waitrose store brings further tenant diversification to the portfolio.”
Supermarket Income REIT focuses on assets with long inflation-linked leases, targeting properties with at least 15 years to lease expiry or first break. Following this week’s acquisitions, the trust’s portfolio includes 25 UK supermarkets leased to major supermarket chains, including: Sainsbury’s, Morrisons, Tesco, Aldi and Waitrose.