LONDON, UK: Supermarket Income REIT (LSE: SUPR) has acquired British Airways Pension Trustees Limited (BAPTL) 25.5 beneficial curiosity within the Sainsbury’s Reversion Portfolio (SRP Portfolio) for £196 million ensuing within the Company’s beneficial curiosity within the SRP Portfolio increasing to 51.0%.
The remaining 49.0% beneficial curiosity within the SRP Portfolio is held by Sainsbury’s plc. The possession construction of the SRP Portfolio will contractually unwind in March 2023 and July 2023 as detailed below.
The SRP Portfolio comprises the freeholds to 26 Sainsbury’s supermarkets of which 21 properties (the “Option Stores”) will be acquired by Sainsbury’s for £1,040 million in two tranches in March 2023 and July 2023.
Beneficial possession of the 5 remaining shops is held between the Company and Sainsbury’s within the identical proportions because the beneficial interests. Sainsbury’s has entered into new 15-year leases on 4 of those shops with 5 yearly open market rent reviews and a tenant break option at year 10. It is anticipated that the one retailer that has not been re-geared will be sold at vacant possession value.
As a results of Sainsbury’s buying the Option Stores, the Company will obtain a minimal of £380 million in money from Sainsbury’s in two tranches, £264 million in March 2023 and £116 million in July 2023.
The Company’s funding within the SRP Portfolio has generated excessive returns for shareholders. To date, it has produced an estimated money-on-money a number of of 1.9x and an IRR of 26%, representing eight pence per share in NTA growth.
The acquisition is anticipated to be attractive versus SUPR’s goal property returns and accretive to the Company’s anticipated return from the SRP Portfolio.
The acquisition of British Airways Pension Trustees Limited (BAPTL) beneficial curiosity additionally gives the Company a 51.0% stake on this strategically important transaction with Sainsbury’s.
The acquisition has been funded entirely by a brand new debt facility (the “Facility”) provided by JPMorgan Chase Bank. The Facility has no recourse to any of SUPR’s assets different than its curiosity within the SRP Portfolio. The Facility has a margin of 1.5% over SONIA and an association fee of 2.0%.
The Facility will be repaid in full following receipt of the primary payment from Sainsbury’s in March 2023.
Based on the Company’s final published property portfolio valuation as at 30 June 2022, the professional forma loan-to-value ratio (LTV) following the acquisition is 39% (from 36% pre-transaction). The LTV is anticipated to say no to 31% following the repayment of the Facility in March 2023 and to 26% in July 2023 following receipt of the second tranche of proceeds from Sainsbury’s.