UK REIT Supermarket Income has announced the purchase of two supermarkets, a Sainsbury’s in Washington, Tyne and Wear, and an Asda in Cwmbran, South Wales, for a total purchase price of £55.1 mln (€66 mln), reflecting a combined net initial yield of 5.3%.
The Washington supermarket, which was originally developed in 1977 and extensively refurbished by Sainsbury’s in 2011, comprises a 83,800 sq ft (7,785 m2) net sales area omnichannel supermarket, a 24-pump petrol filling station, and purpose-built online fulfilment docks. The store forms a key part of Sainsbury’s online fulfilment operations across the region. The 11.7 acre site has provision for 800 car parking spaces and is prominently located in the town centre. The Sainsbury’s store is being acquired with an unexpired lease term of 34 years.
The Asda store in Cwmbran, which represents the firm’s first Asda acquisition, comprises a 81,600 sq ft net sales area omnichannel supermarket located on a prominent 4.4 acre site adjacent to Cwmbran Shopping Centre with access to over 740 car parking spaces. Asda has been trading on the site since the 1970s, with the current store developed in 2015 to form a modern supermarket which is currently undergoing further expansion to incorporate new purpose-built online fulfilment docks. The store will form a key part of Asda’s online fulfilment operations across the region. It is being acquired with an unexpired lease term of 10 years, with 5-yearly, upwards only, open market rent reviews.
In addition, the company said that it has arranged a £136.5 mln increase to its Revolving Credit Facility (RCF) with Barclays and Royal Bank of Canada. Following this increase, the total size of the facility is £250.2 mln with a further £49.8 mln uncommitted accordion option, which is exercisable at any time over the term of the facility.
Ben Green, director of Atrato Capital, the Investment Adviser to Supermarket Income REIT, said: ‘These acquisitions are strong additions to Supermarket Income REIT’s growing portfolio of omnichannel stores and in combination are accretive to both the weighted average unexpired lease term and net initial yield of the Company's portfolio. In addition, the Asda acquisition provides further tenant diversification for the portfolio.’
