Supermarket Reit to ditch trust sector for commercial listing
Supermarket Income Reit (SUPR ) will become the latest trust to leave the sector as it plans to transfer its listing from the closed-end funds category to a regular commercial company listing on the London stock exchange.
The decision by real estate investment trust (Reit), which has a £1bn-plus portfolio of supermarkets leased to big name grocers, marks the latest departure from the property sub-sector, which has been hit hard by high interest rates, rising inflation, and deep discounts.
It follows SUPR’s move to internalise its management earlier this year, which it said could save as much as £4m a year in operating costs. The decision saw Rob Abraham become chief executive and Mike Perkins named chief operating officer, with both moving from former management firm Atrato Group.
Shareholders will be asked to vote on the listing shift to a commercial company, which the board said is ‘more suited to a UK Reit with an internalised management structure and business strategy’.
The board said it will ‘significantly improve comparability for investors, as the majority of internally managed UK Reits are listed on the equity shares category’, including the company’s closest peers.
While the trust is trading on a relatively small 5% discount today, the discount has averaged 17% over the past 12 months, according to Deutsche Numis data. It has shrunk this year as the shares soared 20% on the well-received decision to bring management in-house.
With a hefty discount in the near past, the board is keen to maintain demand for the shares and believes the new listing category will ‘increase investor demand both from the UK and overseas’, as well as catch the eye of a wider range of analysts.
It is also more common to see real estate businesses listed on the regular equity category raise money even when their shares trade at a discount to portfolio value – something that is considered basically unacceptable in the closed-end fund space.
‘The board has consulted with certain shareholders, who are strongly supportive of the proposed transfer,’ said the Reit in a stock market announcement.
SUPR has been busy this year, restructuring and entering into a joint venture with Blue Owl Capital in April that saw it hand over a 50% stake in eight grocery stores in return for £200m and a management contract.
The 50:50 joint venture with US alternatives manager Blue Owl was seeded with eight supermarkets from the existing SUPR portfolio. It also signed a deal to run Blue Owl’s interest in the venture for 0.6% of gross asset value each year.
At the beginning of May, SUPR completed a £90m refinancing through a new secured borrowing facility with Barclays that will used to refinance its existing debt agreements, which were due to mature in the next 12 months.
