Supermarket Income REIT (SUPR) said on Friday that Sainsbury's, its partner in the Reversion portfolio, has exercised a purchase option to acquire 13 stores within the portfolio, which consists of the freeholds to 26 Sainsbury’s supermarkets with a London and South East bias.
The portfolio is currently 51% owned by a 50-50 JV between Supermarket Income REIT and British Airways Pension Trustees, while the other 49% is held by Sainsbury's.
SUPR entered a 50:50 joint venture with British Airways Pension Trustees last year to acquire an interest in the package, one of the UK’s largest portfolios of supermarket properties. The JV acquired its interest through two transactions (in May 2020 and February 2021) for a total of £217 mln (€254 mln) excluding costs.
The portfolio was created through two sale and leaseback transactions by Sainsbury’s in 2000.
The Sainbury’s 13 store acquisition will be completed in March 2023 upon expiry of the current occupational leases. The purchase price under the option is to be determined based on the assumption of a new 20-year lease to Sainsbury's with the initial rent set at the higher of passing or open market, subject to upward-only, five yearly market rent reviews.
In addition, Sainsbury’s has a remaining purchase option to acquire a further 10 stores in the Portfolio, which can be exercised between December 2021 and January 2022.
Ben Green, director of Atrato Capital, the Investment Adviser to Supermarket Income REIT, said: 'Sainsbury's decision to buy back these stores is further evidence of the strength of demand for grocery property in the UK and also demonstrates the balance sheet strength of the supermarket operators. The exercise of this first tranche of options is expected to generate a positive NAV impact for Supermarket Income REIT.'
