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Supermarket Income Reit plans £100m raise

The supermarket landlord is launching an offer open to retail investors via the PrimaryBid platform
Supermarket Income Reit plans £100m raise
  • A retail offer will accompany the placing 
  • Proceeds will be used to fund the acquisition of four supermarkets

Supermarket Income Reit (SUPR) plans to raise £100m by issuing new shares, putting the proceeds towards expanding its portfolio. 

Retail investors will also be able to participate via a separate offer at the same issue price on the PrimaryBid platform. The minimum subscription stands at £1,000 per investor under the terms of the offer, which is open to private investors who are either “professionally advised or financially sophisticated”. The offer closes on March 18 at 11am. 

The shares will be issued at 106p, a 3.2 per cent discount to the closing price on 3 March, the day prior to the placing announcement, and a 1.9 percent premium to the Reit’s EPRA net tangible asset value of 104p a share at the end of December.

The proceeds of the fundraising will contribute to the purchase of four assets worth a combined £230m, with the remainder funded by debt. The Reit’s investment adviser, Atrato Capital, has identified a further pipeline of nine assets with an aggregate value of around £184m. 

The commercial landlord focuses investment on omnichannel supermarkets, which also have capacity to service growing demand for online grocery shopping. Tenants include Tesco (TSCO), Asda and Morrisons (MRW).

Based on the current timetable, the new shares will qualify for the third quarterly dividend, due to be declared in April and paid the following month. The Reit is targeting a payment of 5.86p for the 12 months to 30 June and paid an aggregate 2.93p out to shareholders for the first half of the financial year. The latter was fully-covered by EPRA earnings. 

At 107p, the shares trade at a marginal premium to consensus forecast NAV at the end of June. However, that seems more than justified by a relatively secure rental income stream and inflation-linked dividends on offer. Buy.

Last IC view: Buy, 108p, 17 Sep 2020