UK REIT Supermarket Income has confirmed the purchase of a portfolio of supermarkets via a sale-and-leaseback transaction with Waitrose for £74 mln (€82 mln), reflecting a net initial yield of 4.4%.
The portfolio comprises six freehold supermarkets with an average gross internal area of 32,000 sq ft (3,000 m2). The stores are let to Waitrose on new 20-year leases with a tenant-only break option in year 15 and are subject to five-yearly, upward-only, CPIH-linked rent reviews. The stores form a key part of Waitrose’s UK online grocery fulfilment network and offer home delivery and/or click and collect.
Ben Green, director of Atrato Capital, the investment adviser to Supermarket Income REIT, said the stores have ‘an impressive trading record’. ‘They are complementary to our existing portfolio, providing further tenant and geographic diversification.’
So far during the lockdown, Waitrose has completed £140 mln worth of sale-and-leaseback transactions, most recently agreeing to sell and lease back five stores from LondonMetric Properties for £62 mln.
Supermarket REIT collected 100% of its June 2020 quarterly billed rents from its occupier base of Tesco, Sainsbury’s and Morrisons.
This is in stark contrast to the wider UK retail property market where initial data suggests less than one seventh was collected on time, a sizeable deterioration on the second quarter when one fifth was collected.
