Supermarket Income REIT, the UK grocery-focused property investor, has acquired a Tesco Extra and an Aldi supermarket in Beaumont Leys, Leicester from British Land for a net total of £63.4 mln (€71 mln).
The deal reflects a combined net initial yield of 6.4%. According to analyst Goodbody, it is likely to add £4.4 mln to the investment trust's annualised rent roll.
The Tesco store was originally developed in the 1980s, and extended in 2007 to become a 97,000 ft2 (9,010 m2) net sales area Tesco Extra. The site has parking provision for over 700 vehicles and a 12-pump petrol filling station.
In addition to the supermarket, the Tesco also includes purpose-built online fulfillment facilities. It is being acquired with an unexpired lease term of 7 years, with 5-yearly, upwards only, open market rent reviews. The next rent review is in February 2023.
The Aldi supermarket is opening this year and extends to 14,800 ft2 of net sales area. It has been acquired with an unexpired lease term of 25 years (with break options at years 15 and 20) with 5-yearly, upwards only, RPI-linked rent reviews.
Adjoining the Tesco Extra and the Aldi supermarket is a parade of units comprising 33,000 ft2 net sales area, predominantly occupied by Costa, Greggs, WH Smiths and Pets at Home.
The site is adjacent to Fletcher Shopping Mall which will be retained as a separate interest by the vendor.
Ben Green, director of Atrato Capital, the investment adviser to Supermarket Income, said: 'We are pleased to have acquired a further omnichannel Tesco Extra, with this asset operating as a key online grocery fulfillment hub for Tesco. The Aldi acquisition provides further tenant diversification for the portfolio. Furthermore, we believe this site offers valuable asset management opportunities.'
The Aldi purchase marks Supermarket Income's debut discounter deal. Goodbody notes that it is unusual in that it is on a long and inflation-linked lease, while most Aldis and Lidl's are owner-occupied or on market rent reviews.
Accordingly, the deal sees the investment trust's rent roll expand to five operators: Tesco, Sainsburys, Morrisons, Waitrose, and Aldi.
Goodbody added that the transcation would enable the analyst to lift earnings and dividends expectations for Supermarket Income.
