The trustee company for the British Airways pension fund has formed a 50:50 joint venture with Supermarket Income REIT to buy a 25.5% stake in a £400m (€448m) portfolio of UK supermarket properties.
British Airways Pension Trustees and the UK supermarket real estate investor will each invest £51m to buy the stake from British Land.
Announcing the deal, Supermarket Income REIT said the joint venture will hold its 25.5% stake in the portfolio of 26 Sainsbury’s supermarkets alongside Sainsbury’s and Aviva which hold a 49% and 25.5% stake respectively.
Nick Hewson, chairman of Supermarket Income REIT, said: “Our investment in this Sainsbury’s property portfolio gives us an interest which we believe will be highly net asset value accretive over the next three years.
“We will work closely with the co-owners, Sainsbury’s and Aviva, to extend the leases and find a solution to the longer-term ownership of the properties.”
According to Colm Lauder, a real estate analyst at institutional brokerage firm Goodbody, Supermarket Income REIT’s joint venture gives the firm an early look at what will be “one of best supermarket portfolios available when it comes up for refinancing, sale or marketing in 2023”.
Lauder said the portfolio assets are predominately (60%) located in London and the South East and are mostly (23/26) omnichannel supermarkets with healthy property fundamentals and include top-performing regional stores.
”This transaction is somewhat different to Supermarket Income REIT’s acquisitions to date but addresses a key challenge, the ability to scale in a single market segment.
”Supermarket Income REIT’s has now opened to door to one of the largest, and best quality supermarket portfolios ever created in the UK, and when the current bonds expire in 2023, this transaction could present considerable upside for the REIT given the myriad of value creation options.”
To read the digital edition of the latest IPE Real Assets magazine click here.
