Supermarket Income REIT PLC said on Monday it has acquired a Sainsbury’s omnichannel supermarket in Huddersfield, West Yorkshire.
The acquisition was valued at £49.7 million and reflects a net initial yield of 7.6%. The property includes a 113,348-square-foot Sainsbury’s store and a petrol station on an 8.5-acre site.
The lease, which has 11 years remaining, is tied to annual rent reviews linked to the retail price index, with a cap of 4% and a floor of 0%.
Supermarket Income is a London-based real estate investment trust, with a £1.73 billion portfolio of assets occupied by the likes of chains including Tesco PLC, J Sainsbury PLC and Waitrose.
The company said the acquisition was funded through its existing debt facility, bringing its loan-to-value ratio to 39%. The portfolio’s weighted average unexpired lease term now stands at 12 years. It added that growth in its £113.1 million rent roll is expected to offset the impact of rising financing costs driven by interest rate trends.
Supermarket Income said the purchase aligns with its strategy of securing income from investment-grade covenants and supports its aim to deliver progressive dividend payments.
The company has maintained a record of progressive dividend growth since 2020, when it paid a total dividend of 5.85 pence per share. This increased to 6.02 pence in 2023. For 2024, the company has set a target dividend of 6.06p, representing a 0.7% increase from the previous year.
The company described the transaction as ‘attractive value’, and noted increasing competition for grocery property assets, which it said supports property valuations. The acquisition is part of the company’s broader efforts to enhance earnings and dividend growth through strategic investments, capital recycling, and operational efficiencies.
Ben Green, principal of Atrato Capital, the company’s investment adviser, said: ‘We remain highly focused on driving returns and continue to explore all avenues to enhance shareholder benefits.’
Shares in Supermarket Income were up 0.6% at 68.90 pence each in London on Monday morning.
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