Supermarket Income REIT is raising £100 million through an equity issue to fund the purchase of nine grocery assets worth £216 million in aggregate.
The real estate investment trust owns supermarket properties let to major UK grocers and has been scaling its platform through a mix of acquisitions and debt refinancing.
The pipeline splits into two parts.
An "Acquisition Portfolio" of three supermarkets, comprising a Sainsbury's in Manchester and Tesco stores in Edinburgh and Halifax, is due to complete in September for £118 million at an average net initial yield of 6.9%.
A further six "Pipeline Assets", including five supermarkets and one grocery distribution site, are expected to complete within three months for £98 million.
Combined, the nine assets carry a weighted average unexpired lease term of 10 years, average rents of £28 per sq ft and a blended net initial yield of 6.6%.
The company will use leverage alongside the equity proceeds, maintaining its stated maximum loan-to-value of 45% and a net debt to EBITDA ratio of 7 to 8 times.
Management expects the combined issue and acquisitions to be accretive to earnings within the first full year, with minimal dilution to net tangible assets, and to support a lower EPRA cost ratio.
The deal follows a run of recent moves: a €123 million French sale-and-leaseback with Carrefour completed in November, a £222 million increase to a joint venture term loan in March, and a £445 million debt refinancing across six lenders completed on 2 July that cut the average margin to 1.18% above SONIA.
Directors including chief executive Rob Abraham and finance chief Mike Perkins intend to participate in the issue for a combined £180,000.
Completion is conditional on shareholder approval at a general meeting and admission by 8am on 5 August, with a longstop of 14 August.
