Demand for groceries helps Supermarket REIT double profits
Strong trading across the grocery market has enabled Supermarket Income REIT to boost its annual rental income by 52% to £70.2m for the six months ended 31 December.
The REIT’s pre-tax profit more than doubled from £33m in 2020 to £68.9m in 2021.
Chairman Nick Hewson said the strong set of results reflected “significant growth” for the business over the period. During the six months under review, Supermarket REIT added eight new supermarkets to its portfolio through a £243.m acquisition. Since the end of the period, the firm has added three more assets to its portfolio at a cost of £128.3m.
Strong trading across the grocery market has enabled Supermarket Income REIT to boost its annual rental income by 52% to £70.2m for the six months ended 31 December.
The REIT’s pre-tax profit more than doubled from £33m in 2020 to £68.9m in 2021.
Chairman Nick Hewson said the strong set of results reflected “significant growth” for the business over the period. During the six months under review, Supermarket REIT added eight new supermarkets to its portfolio through a £243.m acquisition. Since the end of the period, the firm has added three more assets to its portfolio at a cost of £128.3m.
Hewson said: “Our strategy is to invest in omnichannel supermarkets, which we firmly believe is the future model of grocery retailing in the UK.
“Omnichannel supermarkets operate both as physical supermarkets and as online fulfilment centres, performing a critical role in the business strategies of our tenants.
“Over the past two years, UK grocery sales have materially increased above pre-pandemic levels. This reflects the lasting impact of changes to working habits on the UK grocery market.”
He added: “Kantar’s January 2022 grocery sales data demonstrates the full extent of this impact, with UK grocery sales remaining 10% higher than pre-pandemic levels, despite the gradual re-opening of the economy.”
Supermarket REIT’s portfolio is now valued at £1.4bn, up by £265.1m.
Looking ahead, Hewson said he remained confident about the future trading of the group.
“We are now operating in a highly inflationary environment, making our secure, upward-only, inflation-linked rental reviews an ever more appealing source of inflation protected income. Given the high degree of correlation between inflation and food prices and the level of investor appetite in the sector, we believe we will see continued progressive growth in both supermarket rents and capital values,” he said.
“While we remain mindful of the uncertain political and macro-economic outlook and the ongoing economic risks of rising inflation and higher interest rates, we nevertheless feel well positioned for the future given the strengths of our chosen sector and the resilience of our income profile.”
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