Specialist grocery store investor Supermarket Income REIT has acquired a Tesco supermarket, an Iceland Food Warehouse and complementary non-grocery units in Bradley Stoke, Bristol.
The deal volume was £84.0 mln (€93 mln) excluding acquisition costs, reflecting a net initial yield of 5.6%.
The transaction demonstrates the continuing appetite for grocery store assets, according to market watchers, while suggesting that yields are moving out across the sector.
Said Colm Lauder, real estate analyst at Goodbody: 'The pricing evidence from this acquisition shows that yields have become softer in the wider investment market, a direction which was also evidenced by LXI REIT’s (now cancelled) proposed Sainsbury’s portfolio acquisition at a 5.0% yield for newly let, on a long-lease, product.'
The 19.8 acre (8 ha) site acquired by Supermarket Income includes a 74,717 ft2 (6,940 m2) net sales area Tesco supermarket with a 16-pump petrol filling station and 925 car parking spaces.
The store is an online hub for Tesco, operating 20 home delivery vans and a dedicated Click & Collect facility. Tesco has operated at the site since the 1980s and through an extensive refurbishment, expanded the store in 2007.
The site also includes an Iceland Food Warehouse and further complementary units providing convenience and health services with tenants including Boots, Greggs, Costa Coffee and Pets at Home.
The site is being acquired from CBRE Investment Management. The Tesco store has an unexpired lease term of 14 years, with annual, upwards-only, RPI-linked rent reviews (with a 3.5% cap and a 0.0% floor).
Ben Green, director of Atrato Capital, the investment adviser to Supermarket Income REIT plc, said: 'We are very pleased to be adding this top trading omnichannel Tesco store to the portfolio together with the complementary essential retailers at this site.'
LXi, meanwhile, confirmed in a briefing note that it had notified Sainsbury's of its decision 'not to proceed further with the portfolio purchase or equity funding given the current stock market volatility'.
