REG - Supermarket Inc REIT - Strategic Joint Venture with Blue Owl Capital

Supermarket Income REITAnnouncement

24/04/2025 07:02

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RNS Number : 9474F  Supermarket Income REIT PLC  24 April 2025

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VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.

 

FOR IMMEDIATE RELEASE

 

 

24 April 2025

 

SUPERMARKET INCOME REIT PLC 

(the "Company") 

 

STRATEGIC JOINT VENTURE with blue owl Capital MANAGED FUNDS seeded with £403m
of uk supermarkets

  

Supermarket Income REIT plc (LSE: SUPR), is delighted to announce that it has
entered into a strategic joint venture (the "JV") with funds managed by Blue
Owl Capital ("Blue Owl"), a leading US alternative asset manager with over
$250 billion of assets under management. This is part of the Company's ongoing
strategy to recycle capital at attractive valuations and grow earnings.

JV transaction

The JV has been seeded with eight high yielding, omnichannel supermarket
assets from SUPR's existing portfolio (the "Seed Portfolio"), which have been
transferred into the JV at a 3% premium to book value, as at 31 December 2024.
The Seed Portfolio has a combined value of £403 million, an average net
initial yield of 6.6% 1  (Cap Rate of 7.1%) and a WAULT of 11 years.

The Company will retain a 50% stake in the JV, and therefore will receive a
net cash consideration of c.£200 million in respect of the sale of the
assets.  It will also receive a management fee of 0.6% per annum of the gross
asset value for the ongoing management of Blue Owl's interest in the JV and
potentially a performance fee if the JV meets certain financial targets.

The JV provides a platform for further growth, seeking to acquire additional
high yielding supermarket assets, with a view to grow the assets of the JV up
to £1 billion over the coming years. The intention of the JV partners is to
scale the vehicle, whereby the JV will have a right of first refusal over
pipeline assets which meet specific investment criteria.

The Company believes that the principal benefits of the JV for shareholders
are as follows:

·    Earnings accretion to SUPR through redeployment of capital, ongoing
management fees and a potential performance fee

·     Leveraging the expertise of the Company's management team of sector
specialists, increasing AUM and, as the JV's assets grow, SUPR will further
benefit from capturing the management fees on an enlarged portfolio

·      SUPR will retain an ongoing interest in a longer-term potential
pipeline of assets that will remain in the JV structure

·      Bringing on board a strategic capital partner with ambitions to
grow its exposure in the UK grocery sector

Use of proceeds

The proceeds from the JV will be used to reduce debt in the near term and to
invest in other supermarkets either directly for SUPR or indirectly through
the JV, based on the investment profile of assets. Following receipt of
proceeds from the JV, which is expected to be financed at c.55% LTV shortly
after completion, the Company will have an LTV of c.31%. Through redeployment
of capital the Company expects to operate at the upper end of its target LTV
range of 30-40%, which will include its share of assets and net debt in the
JV. The Company will continue to keep all capital allocation options under
review.

 

Robert Abraham, CEO of Supermarket Income REIT, commented:

"The JV with Blue Owl's managed funds brings a high quality, strategic capital
partner that shares our conviction in the value of high yielding UK
supermarkets. With the potential to grow to £1bn over the coming years the JV
partnership represents Blue Owl's managed funds' first major investment in the
UK grocery space and is a strong endorsement of the expertise and track record
SUPR has established in this market.

For our shareholders, the JV is another important milestone in our strategy to
recycle capital and grow earnings, and provides a platform for growth with
specialist third party capital. This follows a period of significant progress
on a number of key strategic initiatives set out in November 2024, including
renewing the three shortest leases in the portfolio, material cost reductions
culminating in the internalisation of the management of the Company and other
capital recycling activity."

Marc Zahr, Co-President and Global Head of Real Assets at Blue Owl, said:

"SUPR is the leading UK grocery real estate investor, and we view them as the
right counterparty as we execute on our first major transaction in the UK
grocery sector. We see an opportunity to generate attractive returns from
these assets, which are underpinned by the growing and highly resilient UK
grocery sector. We look forward to working with SUPR to grow the JV, as we
execute on an attractive pipeline of UK assets."

 

Supermarket stores in the Seed Portfolio

 Operator     Location
 Morrisons    Sheffield
 Sainsbury's  Cheltenham
 Sainsbury's  Huddersfield
 Tesco        Cumbernauld
 Tesco        Llanelli
 Tesco        Sheffield
 Tesco        Stoke-on-Trent
 Tesco        Worcester

 

About Blue Owl

Blue Owl (NYSE: OWL) is a leading asset manager that is redefining
alternatives.

With over $250 billion in assets under management as of December 31, 2024,
Blue Owl invests across three multi-strategy platforms: Credit, GP Strategic
Capital, and Real Assets. Anchored by a strong permanent capital base, Blue
Owl provides businesses with private capital solutions to drive long-term
growth and offer institutional investors, individual investors, and insurance
companies differentiated alternative investment opportunities that aim to
deliver strong performance, risk-adjusted returns, and capital preservation.

Together with over 1,100 experienced professionals globally, Blue Owl brings
the vision and discipline to create the exceptional. To learn more,
visit www.blueowl.com
(https://c212.net/c/link/?t=0&l=en&o=4355454-1&h=433695787&u=https%3A%2F%2Fwww.blueowl.com%2F&a=www.blueowl.com)
.

 

The person responsible for arranging release of this announcement on behalf of
SUPR is Rebecca Lillington.

 

 FOR FURTHER INFORMATION
 Supermarket Income REIT                                                                                                  ir@suprplc.com
 plc
 Rob Abraham / Mike Perkins / Chris McMahon
                                                                                                                           

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

 Goldman Sachs International                                                                                              +44 (0)20 7774 1000

 Tom Hartley / Luca Vincenzini

 FTI                                                                                                                      +44 (0)20 3727 1000
 Consulting
 Dido Laurimore / Eve Kirmatzis / Andrew Davis                                                                            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.

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.

 

 

 1  NIY based on standard purchase costs of 6.8% and 7.8% for one asset in
Wales

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