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Highlights

  • Supermarket Income REIT enters joint venture with Blue Owl Capital for UK grocery assets
  • The JV focuses on acquiring high-yielding supermarket properties to grow assets to £1bn
  • Proceeds from the deal will be used to reduce debt and fund further acquisitions

Supermarket Income REIT plc (LSE: SUPR) has announced a strategic joint venture (JV) with Blue Owl Capital, a US-based alternative asset manager with over $250 billion in assets under management. The partnership aims to expand SUPR’s portfolio of high-yielding supermarket properties, with an initial £403 million Seed Portfolio comprising eight omnichannel supermarket assets from SUPR’s existing holdings.

This Seed Portfolio was transferred into the JV at a 3% premium to book value, as of December 31, 2024. The properties have an average net initial yield of 6.6% and a weighted average unexpired lease term (WAULT) of 11 years. SUPR will retain a 50% stake in the JV, receiving approximately £200 million in net cash consideration from the transaction. Additionally, SUPR will earn a management fee of 0.6% of the JV’s gross asset value and may receive a performance fee based on the JV’s financial performance.

The JV is designed as a platform for further growth, with plans to scale its assets to £1 billion. It will also have a right of first refusal over pipeline assets meeting specific investment criteria. SUPR sees several benefits from the deal, including earnings accretion through redeployment of capital, ongoing management fees, and the opportunity to manage a larger portfolio as the JV grows.

The proceeds from the JV will be used to reduce debt and fund further supermarket acquisitions, either directly or through the JV, in line with SUPR’s strategy to enhance shareholder value. Following the transaction, SUPR’s loan-to-value (LTV) ratio is expected to reduce to around 31%, with capital allocation remaining a key focus for future growth.