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Supermarket Income REIT hails resilience of grocery sector

Published: 03:35 30 Mar 2023 EDT

Supermarket Income REIT PLC - Supermarket REIT hails resilience of grocery sector

Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) hailed the resilience of the food retail sector as it reported a 36% increase in passing rent in the first six months of the property company’s financial year.

As the name suggests, the group has a portfolio of stores owned by the likes of Tesco and Sainsbury.

In the face of the cost-of-living crisis sparked by rising and historically high inflation rates, food retailers have remained largely immune to these pressures.

"This period has seen a very strong underlying performance of the grocery sector with the most recent data from Kantar showing 8.8% sales growth on the prior year and annualised sales now exceeding the levels seen at the height of the pandemic,” said Supermarket REIT’s chairman Nick Hewson.

His comments came alongside the financial results for the six months to 31 December 2022, which showed passing rents up from £70.2mln to £95.5mln. Adjusted earnings grew 35% to £36.4mln, while the dividend was held at 3p a share.

Although the macro-economic uncertainty has not hindered the food retail sector, the consequent interest rate rises that accompanied double-digit inflation have. Net tangible asset value fell 20% to 92p in the period under review.

Hewson remains upbeat on the prospects for the REIT. “We have a high quality, handpicked portfolio of supermarket property with 100% rental collection, benefitting from being in the non-discretionary spend sector of grocery,” he said.

“Our secure rental income is 80% linked to inflation. Our debt is 100% fixed (or hedged to fixed) giving us a high degree of certainty of cashflows and, therefore, dividend over the medium term."

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