REG - Supermarket Inc REIT - Proposed Management Internalisation

Supermarket Income REITAnnouncement

04/03/2025 07:15

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250304:nRSD1879Za&default-theme=true

RNS Number : 1879Z  Supermarket Income REIT PLC  04 March 2025

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

 

FOR IMMEDIATE RELEASE

 

4 March 2025

 

Supermarket Income REIT plc

(the "Company")

Proposed Management Internalisation

Supermarket Income REIT plc (LSE: SUPR), the real estate investment trust with
secure, inflation-linked, long-dated income from grocery property, announces
that after careful consideration the Board has reached agreement with Atrato
Group to internalise its management function, subject to shareholder approval,
for a consideration of £19.7 million (the "Internalisation"). This will be
funded from the proceeds recently received by the Company from the sale of its
large format omnichannel Tesco store in Newmarket to its operator, Tesco plc,
for £63.5 million, which was completed at a 7.4% premium to the 30 June 2024
valuation.

The Board believes that the Company has reached a scale and maturity for which
an internalised management structure is appropriate and that the
Internalisation delivers a number of compelling financial and strategic
benefits, including:

·      Significant cost savings of at least £4 million per annum,
equivalent to a yield on cost of c.19%

·   Delivering the highest return on capital of any capital allocation
option, whilst share buybacks and property acquisitions remain under
consideration for future capital recycling

·     Opportunity to achieve a material enhancement in EPRA earnings and
long-term dividend cover, with the potential for higher future dividend growth

·     A new EPRA cost ratio target of below 9%, one of the lowest in the
sector

·     Enhancing the alignment between the Company, its management and
shareholders

·   Simplified management structure, securing the specialist supermarket
fund management team and platform through the transfer of the systems,
know-how and proprietary market knowledge that Atrato has developed since 2017

·   Creating a structure more appropriate for a UK REIT of the scale of
SUPR, providing greater strategic flexibility, improving shareholder returns
and broadening SUPR's potential investor universe

·     Enabling the Company to pursue a transfer of its listing to the
"equity shares (commercial company)" category

·     Improved access to capital and balance sheet flexibility

·   Potential future fee generation opportunities for the Company,
leveraging the team's expertise through joint ventures

These benefits, alongside recently announced progress against other key
strategic initiatives, are designed to reduce cost, deliver sustainable and
growing earnings and ultimately help reduce the current share price discount
to NTA.

The Company will continue to invest in supermarket property forming a key part
of the future model of grocery. The supermarkets the Company owns will
continue to be let to leading supermarket operators in the UK and Europe,
diversified by both tenant and geography. The focus will remain on grocery
stores which are omnichannel, fulfilling online and in-person sales and the
Company will remain a leading landlord of omnichannel supermarkets in the UK.

The Internalisation is expected to take effect on or around 25 March 2025,
subject to shareholder approval.

Ben Green and Steve Windsor, Principals at Atrato Group, have agreed to a lock
up (subject to customary exemptions) in respect of an aggregate of 4,819,294
shares held by them and their respective connected persons until 31 March
2026.

Following Internalisation, Rob Abraham, the current Fund Manager and Managing
Director, Supermarkets, at Atrato Group, will be appointed as Chief Executive
Officer and Mike Perkins, the current Finance Director, Supermarkets, at
Atrato Group, will be appointed as Chief Financial Officer of the Company.
Both will join the Board upon completion. Reflecting their current day-to-day
responsibilities, they will oversee the Internalisation to ensure continuity
in the management of the Company, its assets and the transfer of key
investment, asset management, finance, operations and IR employees from Atrato
to SUPR.

Rob has been Fund Manager, Supermarkets, for the last three years and with the
Atrato Group for six years, having played a key role in the growth of the
Company from seven supermarkets to 82 during that time. Rob joined from Lloyds
Bank, most recently working in the Loan Markets business originating,
structuring and syndicating debt facilities across corporate, funds and real
estate sectors. He has 14 years of experience across real estate, finance,
capital markets and investment, and holds the Chartered Financial Analyst
designation.

Mike has been Finance Director, Supermarkets, for the last year and provides
financial, strategic, treasury and tax support to the Company on behalf of
Atrato Capital Limited. Mike joined from Logistics Asset Management LLP, the
investment advisor to Urban Logistics REIT plc, where he was Chief Financial
Officer. Mike has 15 years' experience within the real estate and financial
services sector and has worked in listed real estate for over eight years. He
is a Fellow of the Association of Chartered Certified Accountants.

The decision to internalise is a natural next step and the result of a
collaborative process between the Board and the Investment Adviser. Based on
an analysis of the Company's capital allocation options, the returns from
internalisation are materially higher than alternative uses of the Company's
capital, for example share buybacks or property acquisitions. The
consideration has been funded through the proceeds of the recently announced
disposal of Tesco Newmarket, with a payback period of c.5 years.

Atrato Group will receive an additional £0.3 million for the termination of
its AIFM agreement and, to ensure continuity of operations, Atrato will
receive £0.8 million for the provision of transitionary services for up to 9
months post completion.

The Company is in a strong position for the next phase of its growth, as the
UK's only listed grocery real estate specialist with a high-quality handpicked
portfolio of 82 strongly performing supermarkets in the UK and France.

The Board has determined that the Internalisation will be subject to a
voluntary shareholder vote.

If the proposed Internalisation becomes effective, the Company will seek a
transfer of its listing from the "closed-ended investment funds" category to
the "equity shares (commercial companies)" category. The Board expects that
such a transfer of listing will reduce the administrative burden, provide
greater operational flexibility, and potentially attract a wider range of
investors and research analysts.

 

Nick Hewson, Chair of Supermarket Income REIT plc, commented:

"SUPR is of a scale and maturity where we believe an internalised structure is
appropriate as the Company moves into the next phase of its growth. Alongside
the other strategic initiatives that we have undertaken in recent months, it
will reduce costs and deliver sustainable and growing earnings.

The Board would like to thank Steve Windsor, Ben Green and the wider Atrato
business for their invaluable contribution to the performance and growth of
the Company over the last eight years. We wish the whole of the Atrato
platform well for the future."

 

Ben Green, Principal at Atrato Capital said:

"We are very proud of the growth of SUPR, a company which started with a
single store in 2017 and is now a FTSE 250 constituent with 82 supermarkets in
its portfolio. We recruited Rob and Mike into the business as potential future
leaders and are delighted that they will have this opportunity to lead the
internalised business into this new and exciting phase for the Company."

 

Shareholder Circular

Atrato Capital is a related party of the Company and the other Atrato entities
are associates of Atrato Capital. Entry into the Internalisation Agreement and
the related transaction documents therefore each constitute a relevant related
party transaction under UKLR 11.5.4R. While the Company is not required to
obtain shareholder approval, the Board has determined that the Internalisation
will be subject to a voluntary shareholder vote. The Company has therefore
published a Circular today in connection with the Proposed Internalisation
which contains a notice convening a General Meeting to be held on 20 March
2025. As will be set out in the Circular, at the General Meeting the Board is
also proposing the adoption of a new directors' remuneration policy, adoption
of a new LTIP and increasing the cap in the Company's articles of association
on director fees, reflecting the updated structure and composition of the
Company's board following completion of the Internalisation.

The Board considers the Proposals to be in the best interests of the Company
and its Shareholders as a whole. Accordingly, the Directors therefore
unanimously recommend that Shareholders vote in favour of all the Resolutions,
as the Directors who hold Ordinary Shares intend to do in respect of their own
beneficial holdings (and the beneficial holdings which are under their control
and those of their close relatives), which amount to 2,092,386 Ordinary
Shares, representing approximately 0.7 per cent. of the Ordinary Shares.

 

General Meeting

The Board is convening the General Meeting to be held at 2 p.m. on 20 March
2025 at the offices of Macfarlanes LLP, 20 Cursitor Street, London EC4A 1LT.

As your participation is important to us, we would encourage you to vote ahead
of the General Meeting by appointing your proxy in the manner described in the
Circular, no later than 2 p.m. on 18 March 2025.

 

Expected Timetable ((1))

 Announcement of the Proposals                             4 March 2025

 Publication of the Circular                               4 March 2025

 Latest time and date for receipt of proxy appointments    2 p.m. on 18 March 2025

 General Meeting                                           2 p.m. on 20 March 2025

 Expected completion date of the Internalisation           25 March 2025 ((2))

 

Notes:

(1) The times set out in the expected timetable of principal events above and
mentioned throughout this document are times in London unless otherwise
stated, and may be subject to change, in which event details of the new times
and dates will be notified to Shareholders.

(2) These times and dates are indicative only and will depend on, amongst
other things, the date upon which the Condition is satisfied.

 

The Board considers the Internalisation to be fair and reasonable as far as
the shareholders of the Company are concerned, having been so advised by the
Company's Sponsor, Stifel Nicolaus Europe Limited.

Capitalised terms used in this announcement have the meanings given to them in
the Circular to be published in connection with the Proposed Internalisation
on or around the date of this announcement.

 

 FOR FURTHER INFORMATION                                                                                                  

 Supermarket Income REIT                                                                                                 via FTI Consulting
 plc                                    
 Nick Hewson / Sapna Shah

 Rob Abraham / Mike Perkins / Chris McMahon

 Stifel Nicolaus Europe Limited                                                                                          +44 (0)20 7710 7600 
 Mark Young / Rajpal Padam / Madison Kominski                                                                             

 Goldman Sachs International                                                                                             +44 (0)20 7774 1000

 Tom Hartley / Luca Vincenzini
                                                                                                                          
 FTI                                                                                                                     +44 (0)20 3727 1000 
 Consulting                                                    
 Dido Laurimore / Eve Kirmatzis / Andrew                                                                                 SupermarketIncomeREIT@fticonsulting.com
 Davis                                                                                                                   (mailto:SupermarketIncomeREIT@fticonsulting.com)   

Notes to Editors

 

Supermarket Income REIT plc (LSE: SUPR, JSE: SRI) is a real estate investment
trust dedicated to investing in grocery properties which are an essential part
of the feed the nation infrastructure. The Company focuses on grocery stores
which are omnichannel, fulfilling online and in-person sales. The Company's
supermarkets are let to leading supermarket operators in the UK and Europe,
diversified by both tenant and geography.

The Company's assets earn long-dated, secure, inflation-linked, growing
income. The Company targets a progressive dividend and the potential for
capital appreciation over the longer term.

The Company is listed on the Closed-ended investment funds category of the
FCA's Official List and its Ordinary Shares are traded on the LSE's Main
Market. The Company also has a secondary listing on the Main Board of the JSE
Limited in South Africa.

Atrato Capital Limited is the Company's Investment Adviser.

 

Further information is available on the Company's website
 www.supermarketincomereit.com (http://www.supermarketincomereit.com/)

 

LEI: 2138007FOINJKAM7L537

 

Stifel Nicolaus Europe Limited, which is authorised and regulated in the
United Kingdom by the Financial Conduct Authority, is acting exclusively for
Supermarket Income REIT plc and no one else in connection with this
announcement and will not be responsible to anyone other than the Company for
providing the protections afforded to clients of Stifel Nicolaus Europe
Limited nor for providing advice in connection with the matters referred to in
this announcement.

Goldman Sachs International, which is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the Prudential
Regulation Authority in the United Kingdom, is acting exclusively for
Supermarket Income REIT plc and no one else in connection with this
announcement and will not be responsible to anyone other than the Company for
providing the protections afforded to clients of Goldman Sachs International
nor for providing advice in connection with the matters referred to in this
announcement.

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  CIRXXLLBEXLLBBB