Supermarket Income REIT acquires Tesco omnichannel store in Stoke-on-Trent for £34.7m

Supermarket Income REIT plc (LSE: SUPR), a distinguished real estate investment trust specializing in grocery property across the UK, has recently expanded its portfolio through the acquisition of a pivotal Tesco omnichannel supermarket located in Stoke-on-Trent, Staffordshire. The transaction, valued at £34.7 million (excluding acquisition costs), signifies a strategic enhancement to the REIT’s asset base, promising secure, inflation-linked income with a net initial yield of 7.5%.

The property, encompassing a 54,451 sq ft net sales area along with a petrol filling station on an 8.7-acre site, supports Tesco’s multifaceted online fulfilment operations, including home delivery services and customer Click & Collect. Constructed in 1994, this acquisition comes with an 11-year unexpired lease term, featuring annual RPI-linked rent reviews capped at 4% and floored at 0%, underscoring the investment’s resilience to inflation and its alignment with the REIT’s income stability objectives.

In conjunction with this acquisition, Supermarket Income REIT also announced revisions to its investment advisory agreement with Atrato Capital Limited and JTC Global AIFM Solutions Limited. The revised agreement introduces modifications primarily related to the termination provisions, aiming to clarify the process in the event of a takeover, delisting, or liquidation, known as a “Relevant Event.” This amendment seeks to preserve the original commercial intentions between the board and the investment adviser, offering enhanced clarity and fairness for all involved parties.

The key changes to the agreement include the option for the company to terminate the agreement immediately following a Relevant Event, with the Investment Adviser receiving a payment in lieu of a two-year written notice, based on the last available net asset value before the event. This provision ensures a streamlined and equitable process for terminating the agreement under extraordinary circumstances, reinforcing the trust’s governance framework and operational flexibility.

The acquisition of the Tesco omnichannel supermarket by Supermarket Income REIT represents a calculated move to strengthen its presence in the UK’s competitive grocery real estate sector. By securing assets that offer inflation-protected returns and robust tenant covenants, the REIT is well-positioned to navigate economic uncertainties while delivering consistent value to its shareholders. This strategic acquisition, coupled with the prudent amendments to the investment advisory agreement, highlights the REIT’s commitment to long-term, sustainable growth and operational excellence.