Supermarket Income REIT has formed a 50-50 joint venture with British Airways Pension Trustees to acquire British Land’s 25.5% stake in a portfolio of Sainsbury’s stores for £102m.
The portfolio comprises 26 Sainsbury’s supermarkets, with 60% in London and the South East. The average net sales area of each store is around 61,000 sq ft.
Following the transaction, the freeholds of the properties will be owned by Sainsbury’s (49%), Aviva (25.5%) and the jv (25.5%).
The stores generate an annual rental income of £53m, with the lease rent subject to fixed annual uplifts of 1% per annum. The portfolio is funded by bonds that mature in 2023.
The bonds will amortise out of rental income to £315m outstanding debt upon expiry in 2023. The debt due at this point is expected to be funded by way of a refinancing or sale of the portfolio.
At lease expiry in 2023, Sainsbury’s will have the option to extend its leases for a further 20 years, or to vacate the properties.
The REIT’s contribution to the jv is £51m, excluding costs, which it said will be satisfied from existing cash balances and credit facilities.
Nick Hewson, chairman of Supermarket Income REIT, said: “Our investment in this Sainsbury’s property portfolio gives us an interest which we believe will be highly NAV-accretive over the next three years.
“We will work closely with the co-owners, Sainsbury’s and Aviva, to extend the leases and find a solution to the longer-term ownership of the properties.”
Supermarket Income REIT has formed a 50-50 joint venture with British Airways Pension Trustees to acquire British Land’s 25.5% stake in a portfolio of Sainsbury’s stores for £102m.
The portfolio comprises 26 Sainsbury’s supermarkets, with 60% in London and the South East. The average net sales area of each store is around 61,000 sq ft.
Following the transaction, the freeholds of the properties will be owned by Sainsbury’s (49%), Aviva (25.5%) and the jv (25.5%).
The stores generate an annual rental income of £53m, with the lease rent subject to fixed annual uplifts of 1% per annum. The portfolio is funded by bonds that mature in 2023.
The bonds will amortise out of rental income to £315m outstanding debt upon expiry in 2023. The debt due at this point is expected to be funded by way of a refinancing or sale of the portfolio.
At lease expiry in 2023, Sainsbury’s will have the option to extend its leases for a further 20 years, or to vacate the properties.
The REIT’s contribution to the jv is £51m, excluding costs, which it said will be satisfied from existing cash balances and credit facilities.
Nick Hewson, chairman of Supermarket Income REIT, said: “Our investment in this Sainsbury’s property portfolio gives us an interest which we believe will be highly NAV-accretive over the next three years.
“We will work closely with the co-owners, Sainsbury’s and Aviva, to extend the leases and find a solution to the longer-term ownership of the properties.”
The store list in full:
Alperton, Ealing Road, HA0 4LL
Gloucester, Barnett Way, GL4 3RT
Alton, Draymans Way, GU34 1SS
Guildford, Clay Lane, GU4 7JU
Aylesford, Mills Road, ME20 7NA
Hastings, John Macadam Way, TN37 7SQ
Bromley, Walters Yard, BR1 1TP
Haywards Heath, Bannister Way, RH16 1DG
Chester, Caldy Valley Road, CH3 5QJ
Hemel Hempstead, Apsley Mills, HP3 9QZ
Chichester, Westhampnett Road, PO19 7YR
Kettering, Rockingham Road, NN16 8JY
Coventry, Austin Drive, CV6 7NS
Kidlington, Oxford Road, OX5 2PE
Denton, Oldham Street, M34 3SJ
Knotty Ash, East Prescot Road, L14 5PT
Derby, Wyvern Way, DE21 6NZ
Leamington Spa, Tachbrook Park Drive, CV34 6RH
Doncaster, Thorpe Road, DN2 5PS
Norwich, Queens Road, NR1 3RX
East Grinstead, Brooklands Way, RH19 1DD
Shrewsbury, Hereford Road, SY3 9NB
Eastbourne, Broadwater Way, BN22 9PW
Taplow, Lake End Road, SL6 0QH
Ferndown, Ringwood Road, BH22 9AL
Witney, Witan Way, OX28 6HF
To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette
