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Supermarket Income REIT (SUPR)

MDW1954
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Re: Supermarket Income REIT (SUPR)

#384752

Postby MDW1954 » February 8th, 2021, 1:58 pm

SKYSHIP wrote:I suspect they'll have their Interims next week; and wouldn't be at all surprised if they took their pitcher to the well yet again.


But isn't that true of a lot of REITs? Vide BBOX, WHR, CREI etc?

MDW1954

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Re: Supermarket Income REIT (SUPR)

#384762

Postby Dod101 » February 8th, 2021, 2:08 pm

westmoreland9 wrote:i've looked at this company, one thing that's contradictory about their strategy is that they believe online will grow, so position their supermarkets towards online fulfilling supermarkets. however, supermarkets lose money in every delivery, and it's unclear whether they will ever make money doing it. aldi and lidl don't bother because they know it's a loss making exercise.

so if you believe online will grow, won't this reduce supermarket profitability over time and therefore the covenant? i.e. shift sales from their most profitable route, to the least?

from where i stand, the future model of grocery is smaller, high volume stores like lidl and aldi with lower prices. massive stores with 40k product lines are struggling to achieve the same returns.


I have more or less argued the same point but devotees reckon that in that case supermarket sites can be converted into something else like housing maybe. I am not at all sure about this REIT and will certainly leave it well alone.

Dod

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Re: Supermarket Income REIT (SUPR)

#392907

Postby richfool » March 5th, 2021, 8:42 pm

I note from the AIC website that SUPR is also capital raising currently:
Income investors spoiled for choice as TRIG, SUPR & SHIP offer 5-7% yields at cut price
5 March 2021
Three 'alternative' investment companies - The Renewables Infrastructure Group, Supermarket Income Reit and Tufton Oceanic Assets - have launched share issues to expand their portfolios.
Three high-yielding ‘alternative’ investment companies - The Renewables Infrastructure Group, Supermarket Income Reit and Tufton Oceanic Assets - have launched share issues to expand their portfolios.

SUPR, a 5%-yielding £713m real estate investment trust (Reit) whose portfolio of supermarkets are leased to the likes of Tesco (TSCO) and Sainsbury’s (SBRY), has proposed a £100m placing at 106p. This is a 3% discount to the closing price of 109.5p on 3 March and a 1.9% premium to the end-of-December NAV of 104p (rising to a 3.4% premium when the NAV is adjusted for the recent 1.465p dividend).

The offer is also being made available to private investors via the PrimaryBid app, subject to a minimum subscription of £1,000. The offer will close on 18 March, or earlier if oversubscribed.

The shares closed at 107p yesterday, following the announcement.

https://www.theaic.co.uk/aic/news/cityw ... -yields-at

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Re: Supermarket Income REIT (SUPR)

#398464

Postby brightncheerful » March 23rd, 2021, 9:56 pm

There are risks with upward-only index-linked rent reviews, particularly with supermarkets.

Upward-only does not mean the rent necessarily has to go up. The term 'upward-only' refers to the rent payable after the review which would be to market rent has been agreed or ascertained. If the market rent is the same as or less than the rent payable before the review then the rent payable after the review would be unchanged. (That's simplistic, since it also depends upon which previous rent the upward-only proviso applies to.)

With index-linked reviews, it is common for them to be cap and collar. That is, subject to a minimum and maximum increase, regardless of the index-linking. The range is generally 1% minimum 3% maximum.

On expiry of a lease inside Landlord and Tenant Act 1954, the rent on renewal would be the market rent without the cushion of index-linking. In other words, there is no correlation between the rent before expiry which would've been index-linked and the initial rent on renewal.

Also, on renewal, there is no certainty that the tenant would agree to index-linked reviews in the renewal lease.

In terms of capital value, a supermarket currently let for say 20 years might only want 5 or 10 years with a break clause. Supermarket operators are continually reassessing their needs.

Supermarkets operators are adept at taking new leases with index-linked reviews to satisfy the landlord's investment criteria, which includes an intention to sell the resultant investment as soon as possible after completion of the lease or shortly before the first rent review. The benefit to the supermarket is the landlord's inducement package.

In short, supermarket investments are often structured to maximise capital value on disposal regardless of the consequences for the buyer or future buyer.

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Re: Supermarket Income REIT (SUPR)

#443816

Postby MDW1954 » September 20th, 2021, 1:00 pm


PeanutsMolloy
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Re: Supermarket Income REIT (SUPR)

#443891

Postby PeanutsMolloy » September 20th, 2021, 5:04 pm

Sensing a whiff of desperation to reinvest the forthcoming proceeds from the loss of a number of Sainsburys sites with scraps from the table of other institutional holders taking profit. Not sure how c 1-2 acre Aldi (and M&S) sites truly fit the omnichannel strategy.
May be a nice NAV uplift coming from the enforced Sainsbury sales but market is hardly favourable for replacing the income. This investor's taking profits on SUPR.

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Re: Supermarket Income REIT (SUPR)

#444058

Postby MDW1954 » September 21st, 2021, 10:16 am

Those wanting to learn more about the Sainsbury's transaction to which PeanutsMolloy refers, may find this of interest:

https://www.proactiveinvestors.co.uk/companies/news/960001/supermarket-income-reit-to-sell-13-stores-back-to-sainsbury-s-960001.html

MDW1954

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Re: Supermarket Income REIT (SUPR)

#510946

Postby richfool » June 30th, 2022, 5:39 pm

If anyone was wondering why the large fall in Supermarket Income REIT today, this may clarify:

‘Exposed’ Supermarket Income slides on Peel Hunt downgrade

30 June 2022
Shares in Supermarket Income tumble 6% after broker downgrades popular real estate investment trust from ‘hold’ to ‘reduce’, expressing concern at its high valuation.

Shares in Supermarket Income (SUPR ) have tumbled 6% today after broker Peel Hunt downgraded the popular real estate investment trust (Reit) from ‘hold’ to ‘reduce’, expressing concern at its high valuation.

Investors have piled into the stock this year, attracted by the steady income it earns from long, inflation-linked leases on a portfolio of well-positioned stores in a defensive sector. That’s pushed shares in the wealth manager favourite to a near 15% premium over net asset value this year.

With the Reit’s finance costs rising with interest rates, and questions over the sustainability of its rents, analyst James Carswell said that the high rating looked like an ‘outlier’ in the sector where Secure Income (SIR ) and LXI (LXI ) Reits trade close to par ahead of their merger, and the smaller Value and Indexed Property Income (VIP ) and Alternative Income (AIRE ) trusts stand on discounts of 9% and 12% below net asset value.

Carswell cut his price target for Supermarket Income from 125p to 115p, sending shares, which had risen 9% to 129.5p this year, 7.7p lower to 121.8p.

‘Whilst by no means alone, Supermarket Income Reit looks relatively exposed to recent interest rate increases, with just 44% of existing drawn debt hedged and additional debt required for new purchases. Our analysis suggests current rates could reduce our EPS [earnings per share] forecasts by 8%, and hedging now for five years would lead to a c.20% downgrade.’ That could potentially leave the 5% yielder’s dividend uncovered, Carswell warned investors.

Following a £307m share issue this year, Supermarket Income has £700m of firepower at its disposal to invest, including a credit facility and the proceeds of store sales to Sainsbury’s. However, Carswell cautioned that the Reit was investing in a seller’s market and that with high prices depressing rental yields, the company may have to sacrifice asset quality to support its dividends.
https://www.theaic.co.uk/aic/news/cityw ... -downgrade


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