Supermarket Income REIT announced plans to raise around £50 million, through a new share sale, to fund six acquisitions worth a combined £65.2 million.
It comes just four months after the property investor completed a £100 million equity raise.
The London-listed real estate investment trust, which owns grocery property let to major UK and European supermarket operators, said the transactions comprise 12 assets spanning convenience stores, supermarkets and a distribution centre, at a blended net initial yield of 7.3% and a weighted average unexpired lease term of 12 years.
Supermarket Income REIT completed its previous £100 million raise in July, deploying the proceeds within six weeks into nine grocery assets worth around £220 million, at a blended yield of 6.6%.
Investment in stores
The new pipeline includes two direct transactions with Sainsbury's: a £19 million off-market purchase of seven convenience stores at a 6.2% yield on new 15-year inflation-linked leases, and a £47 million sale-and-leaseback of a Darlington distribution centre, of which SUPR's share is £23.5 million through its joint venture with funds managed by Blue Owl Capital.
The Darlington site serves as Argos's principal northern distribution warehouse, sub-let from Sainsbury's, with current rents of £5.50 per square foot the company says represent an 8.0% yield with reversionary potential.
Three further opportunities include a Waitrose-anchored scheme in Woking for £14.2 million, where the lease has expired with the tenant holding over, a Sainsbury's store in Essex for £5.0 million with an 18-year unexpired term, and a Tesco convenience asset in Surrey already acquired for £1.1 million.
Strong momentum
"This latest equity raise reflects both the strong momentum we have built across the business and our continued confidence in the attractive investment opportunities ahead," said chief executive Rob Abraham, adding that the acquisitions represent "another important step towards our ambition of doubling the size of the portfolio."
The company is also contributing up to £2.5 million toward a new Lidl-anchored foodstore under a 15-year lease, a project announced in September and expected to complete by the end of November.
Read more about Supermarket Income REIT
- 11/09/26 Supermarket Income REIT deploys £100m raise on six new assets
- 15/07/26 Supermarket Income REIT raises £100m for £216m grocery deal
- 02/07/26 Supermarket Income REIT completes £445m debt refinancing at lower margin
Supermarket Income REIT said the £50 million target, combined with prudent leverage, will fund the acquisitions while keeping loan-to-value at approximately 45% on a pro forma basis, in line with its stated maximum, and targeting net debt to EBITDA of 7 to 8 times.
Management expects the issue and acquisitions combined to be accretive to earnings per share from the first full year, with minimal dilution to net tangible assets, and to support a lower EPRA cost ratio.
As at 30 September, the company's portfolio spanned 140 grocery assets across the UK and France worth £2.2 billion, generating annualised passing rent of £144.4 million with a weighted average unexpired lease term of 11 years and a net initial yield of 6.1%.
The company noted that the share sale will comprise an institutional placing via accelerated bookbuild, a placing to South African qualifying investors, and a retail offer through RetailBook, with pricing and share numbers to be announced after the bookbuild closes.
Still a hold, says broker
Panmure Liberum analyst Bjorn Zietsman, in a note, said the proposed c.£50m raise funds acquisitions that look accretive, but added that the absence of ERVs or reversionary-yield data makes the pipeline’s value difficult to assess.
He retains a HOLD and 80p target, compared to a current market price of 83.3p, highlighting management’s claim that the transactions should be EPS accretive from the first full year as the key forward marker.
At the same time, the analyst pinpointed the Darlington Sainsbury’s/Argos distribution centre and the Woking Waitrose with 'regear potential' as the most encouraging individual assets in the deal.