UK-based Supermarket Income Reit has completed a £90m refinancing through a new, unsecured debt facility with Barclays.
The group said on Friday that the facility would be used to refinance its existing secured debt facilities with Wells Fargo and Bayerische Landesbank of £30m and £55.4m, respectively, which are due to mature in the next 12 months and will be cancelled in full.
The interest-only facility has a maturity of three years, with two one-year extension options at the lender’s discretion, and is priced at a margin of 1.55% above the Sterling overnight index average (Sonia).
The company intends to use the value of the existing interest rate hedges on the refinanced Wells Fargo and Bayerische Landesbank facilities to cap the interest rate on the facility at 5% for the three-year term, at no additional cost.
In April, Supermarket Income Reit and US asset manager Blue Owl Capital announced they had set up a £403m joint venture that will see the UK-based firm sell eight properties to the US asset manager in return for a 50% stake in the new structure.
Supermarket Income Reit will receive about £200m for the properties plus an annual management fee of 0.6% of the gross asset value and a performance fee should the partnership meet certain financial targets.
The assets were sold at a 3% premium to their December 2024 book value and offer a net initial yield of 6.6%.
The company plans to use the proceeds to pay debt and for further investments — either directly through the group or through the venture, depending on the asset profile.
“The venture provides a platform for further growth, seeking to acquire additional high yielding supermarket assets, with a view to grow the assets to as much as £1bn over the coming years,” the company said when announcing the joint venture.
Supermarket Income Reit CEO Robert Abraham said the venture with Blue Owl, which oversees more than $250bn in assets, brought in a strong, strategic capital partner that shared the company’s belief in the value of high-yielding UK supermarkets.
After the debt refinancing and completion of the joint venture, the company has an expected pro forma loan-to-value of about 31%.
“This new facility continues our relationship with Barclays, a key funding partner to the company. Our strong relationships with existing lenders and the quality of Supermarket Income Reit’s portfolio continue to allow the company to access debt financing at attractive margins,” said Abraham.
The company invests in supermarket property, notably omnichannel stores which provide in-store shopping, but also operate as last-mile online grocery fulfilment centres for home delivery and click and collect. It has a portfolio of 82 stores valued at £1.8bn located in the UK, Northern Ireland and France.
Its properties are let to established grocers in the UK and France including Tesco, Sainsbury’s, Carrefour, Marks & Spencer, Waitrose, Asda, Aldi, Lidl and Morrisons.
The group was granted a secondary listing on the JSE in December last year. Its shares closed 1.26% higher on Friday at R20.05 and since its listing has risen more than 25%.
With Noxolo Majavu
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