Supermarket Income REIT acquires Sainsbury store for £34 million

Supermarket Income REIT acquires Sainsbury store for £34 million

UK supermarket real estate investor Supermarket Income REIT (LON:SUPR) announced on Wednesday that it had agreed to acquire Sainsbury’s (LON:SBRY) store in Hessle for a consideration of £34.0 million.

The site has been bought from Reassure Limited, and excluding acquisition costs, represents a net initial yield of 5.5%.

The 13 acre site was developed in the 1980s and has since hosted Sainsbury’s, with a ‘substantial’ refurbishment taking place in 2011.

The space is comprised of 50,000 sq feet of sales area, alongside 584 parking spaces and a 12-pump petrol filling station.

It has “purpose-built online fulfilment docks and supports Sainsbury’s online grocery fulfilment for the surrounding area” and has been acquired with an unexpired lease term of 14 years with annual, upward-only, RPI-linked rent reviews.

Supermarket Income REIT added that,

“Included in the purchase price is an adjoining Homebase store comprising 21,000 square feet net sales area with an unexpired lease term of four years. Sainsbury’s guarantee the Homebase rent for the duration of the lease. Consequently, the combined total net initial yield on this purchase of the Sainsbury’s in Hessle, including the rental income from the Homebase, will be 6.3%.”

Supermarket Income REIT comments

Responding to the update, Ben Green, Director of Atrato Capital, the Investment Advisor to Supermarket Income REIT, said:

“This Sainsbury’s superstore is ideally located for both online and offline grocery sales and adds to Supermarket Income REIT’s growing portfolio of omnichannel stores.”

Investor notes

Following the update, the company’s share price rallied 0.40% or 0.43p to 107.43p per share 19/02/20 11:59 GMT. The Group’s p/e ratio is 20.19, their dividend yield is 5.26%.