Proposed Issue of New Ordinary Shares

The board of directors (the “Board” or the “Directors”) of Supermarket Income REIT plc, the real estate investment trust providing secure, inflation-protected, long income from grocery property in the UK, announces its intention to raise approximately £175 million by way of a placing pursuant to the Placing Programme, at an issue price of 121 pence per New Ordinary Share (the “Issue”).

Highlights

• The issue price of 121 pence per New Ordinary Share (the “Issue Price”) represents a discount of 4.3 percent to the closing price of 126.5 pence per existing Ordinary Share of £0.01 each in the capital of the Company (the “Ordinary Shares”) on 6 April 2022 (being the last business day prior to this Announcement) and a 7.1 percent premium to the Company’s last reported EPRA NTA per Ordinary Share of 113 pence as at 31 December 2021
• Secure, inflation-protected, long income grocery property portfolio with capital appreciation potential and 85 percent of current portfolio rental income directly linked to inflation
• Following the Company’s successful migration of its listing to the premium segment on 23 February 2022, the Company expects to be eligible for inclusion in the FTSE UK and FTSE EPRA NAREIT Index Series at the Q2 2022 index review
• The proceeds from the Issue will be used to make additional investments in accordance with the Company’s investment criteria, further diversifying the Group’s portfolio and capitalising on its leading position in the UK supermarket real estate market
• The Company’s investment adviser, Atrato Capital Limited (the “Investment Adviser”), has identified a number of attractive acquisition opportunities across the marketplace, including:
  • assets with an aggregate value of approximately £150 million currently under exclusivity and additional assets with an aggregate value of approximately £120 million currently in advanced due diligence (the “Target Assets”)
  • a further pipeline of assets with an aggregate value of approximately £440 million that meet the Company’s investment criteria (together, the “Pipeline”)
• The £175 million target size for the Issue, together with associated debt financing, should enable the Company to purchase some of the Target Assets. If the target Issue size is exceeded, the Company will consider the possibility of acquiring additional assets in the Pipeline
• The Company and the Investment Adviser have a highly successful acquisition track record and, in the period July 2021 to date, the Company has acquired £372 million of supermarket property assets, fully investing the proceeds of the oversubscribed equity raise of £200 million in October 2021. This represented the eighth consecutive time that the Company has raised equity and deployed the proceeds within six months

The Investment Adviser has proven its ability to identify and acquire attractive investments for the Group. Since the Company’s initial public offering in July 2017 (the “IPO”), the Investment Adviser has deployed over £1.4 billion of capital (excluding acquisition costs) on behalf of the Group into a direct portfolio consisting of 41 supermarket assets (the “Direct Portfolio”) and an indirect interest in a further 26 Sainsbury’s supermarkets through the Company’s joint venture with British Airways Pension Trustees Limited. The Company continues to explore investment opportunities across the market, utilising the Investment Adviser’s extensive contacts in the UK real estate market to source investment opportunities, in particular, through access to contacts such as institutions, property companies, REITs and tenant occupiers in addition to an existing network of investment agency contacts.

The Issue is being conducted in accordance with the terms and conditions set out in the appendix (the “Appendix”) to this announcement (together, the “Announcement”). The prospectus published by the Company on 1 October 2021 (the “Prospectus”) is due to be supplemented by a supplementary prospectus (the “Supplementary Prospectus”), which is expected to be published by the Company following its approval by the Financial Conduct Authority (the “FCA”).

Nick Hewson, Chairman of the Company, said:

“Omnichannel supermarket stores continue to play a pivotal role within the UK’s grocery infrastructure and present a safe haven for investors seeking a source of secure, predominantly inflation-protected income in the current environment of rising inflationary pressures and wider geopolitical uncertainty.

Currently, 85 percent of the Company’s existing rental income is directly linked to growth in inflation, and historically there has been a high degree of correlation between inflation and food prices, which means that the ability of our grocer tenants to pay the rental income remains sustainable in the long term.

Additionally, our focus on acquiring omnichannel stores allows us to benefit from both in-store and online grocery shopping, driven by the growth of working from home which has boosted the entire grocery sector.

Meanwhile the Investment Adviser, with its extensive network and strong track record, remains able to unlock attractive pipeline opportunities for investment so as to ensure that we maintain our record of deploying the proceeds of equity raises into high quality omnichannel stores within six months.”

Below is a video, shot with the investment team of Atrato Group, the advisors behind SUPR, highlighting the Group’s investment strategy

VIDEO: Supermarket Income REIT