Supermarket Income REIT - Maintaining returns, with accretive opportunities

Supermarket Income REIT (SUPR) reported strong H123 results and expects to meet its full year dividend target on a fully covered basis. Earnings are fully protected from interest rate increases in the near term and we forecast rent growth to offset the eventual roll-off from hedging. The balance sheet is liquid and in this note we discuss the relative merits of debt repayment, reinvestment and share repurchases.

Supermarket Income REIT - Reducing NAV but focusing on income

Ahead of interim results for the six months ended 31 December 2022 (H123), Supermarket Income REIT (SUPR) has reported its externally assessed property valuation. The like-for-like 13.3% decline is below the broad market decline of c 19% but above our assumption. We have reduced our FY23e EPRA NTA per share by c 10% to 91p but our forecasts for EPRA earnings, dividends and dividend cover are unchanged.

Supermarket Income REIT - SUPR takes majority interest in indirect portfolio

Supermarket Income REIT (SUPR) has acquired an additional 25.5% beneficial interest in the Sainsbury’s Reversion Portfolio (SRP) from its joint venture (JV) partner. It now has a 51% interest with 49% held by Sainsbury’s. SUPR’s positioning in the winding up of the SRP structure is strengthened, its relationship with Sainsbury’s, operator of the stores, is deepened, and it expects to further enhance the return on its SRP investment. Separately, reflecting widespread expectations that yields will

Supermarket Income REIT - Fully hedged debt protects indexed rent growth

The continued strong advance in Supermarket Income REIT’s (SUPR’s) portfolio in the past year has increased diversification and is generating economies of scale. This was reflected in the 50% uplift in FY22 earnings and increased, fully covered DPS. Supported by indexed rent increases, we forecast continuing positive, dividend-driven, accounting returns, despite higher debt costs, now fully fixed, and a pause in acquisitions.

Supermarket Income REIT - Progressing with accretive deployment

Supermarket Income REIT (SUPR) has acquired four supermarkets for £76.0m, taking the total capital deployed since its highly successful £300.0m equity raise in late April to £159.0m. Index-linked rents and accretive acquisitions are the drivers of income growth and progressive DPS, and we expect further near-term acquisitions despite increasing debt funding costs. Meanwhile, structural trends in the market and the non-discretionary nature of many grocery products support strong tenant covenants.

Supermarket Income REIT - Funded for identified further growth

In this note, we provide an update on Supermarket Income REIT’s (SUPR) continuing growth prospects following completion of the equity raise in April and entry into the FTSE 250 and EPRA NARIET stock indices. Income growth is supported by acquisitions, mostly index-linked rents, strong tenant covenants and positive structural trends in the market. We expect a continuation of progressive DPS despite increasing debt funding costs.

Supermarket Income REIT - Financial and strategic progress

Supermarket income REIT (SUPR) showed a strong H122 financial performance, driven by accretive portfolio growth alongside index-linked rental growth. The prospects for this to continue are well supported by structural trends in the market. SUPR continues to identify accretive acquisition opportunities while its recent admission to the Premium Segment of the LSE and Investment Grade credit rating provide additional flexibility and depth to its funding strategy.

Supermarket Income REIT - Unlocking value in the JV

The decision by Sainsbury’s to exercise its purchase option over additional stores in the ‘indirect portfolio’ will trigger additional capital growth for Supermarket Income REIT (SUPR) within its JV, further underlining the attractiveness of this investment. Meanwhile, SUPR continues to make good progress with capital deployment, supported by a continuing strong acquisition pipeline and recently enhanced debt capital resources.

Supermarket Income REIT - Supermarket sweep

Supermarket Income REIT’s (SUPR’s) development continues apace. Including the three recently announced acquisitions (c £150m before costs), we forecast up to £600m of acquisition investment by FY24 as the proceeds of the recent £200m (gross) equity raise are deployed and the cash proceeds from the JV maturity are recycled. Acquisition yield have compressed with a positive impact on net asset value. With a low average cost of capital, we expect SUPR to grow without diluting dividend growth, while

CMD - Broadening & deepening client relationships

FLASH: In-line trading update

A dose of morosity

No change in the narrative. Aviva’s ship sails on as usual. The PRT business is still going well, inflation remains an impediment to a strong P&C improvement, retail customers seem more interested in the rising cost of living than savings’ products and Aviva investors see no real signs of an improvement. This is the same story as in recent quarters and, in that context, our thesis remains the same.

'Airlines will be shocked when Covid leases run out and rates go up’

Critical Metals Plc - Molulu Operational Update - Target Price £1.14 ps

Event On the 15th May, Critical Metals plc released an operational update relating to their Molulu copper project in the DRC. Key Points 1. 6,500t of copper ore grading 3% copper has been mined 2. The mining focus is moving towards the high grade sulphide copper ore grading above 8.3% copper 3. No cobalt has been identified in the mining so far using hand-held XRF 4. Dewatering of the pits has begun with a trench decanting water from the small pit. Implications As soon as the road rehabilitation

Cenkos: Duke Royalty Ltd -- Record revenues and more to come

Duke has released a Q1/24E trading update which points to a continuation of steady growth in recurring cash revenues and resilient underlying portfolio companies. Guidance for the quarter is for £6m of recurring cash revenues, and total cash revenues are expected to be c£7.5m once the buyout premium from Instor is accounted for. Duke's valuation looks very compelling at current levels with the FY24E dividend yield over 10% whilst being backed by FCF generation.

Morning Note – 5 June 2023

Acquisition of Silver Royalty

Trident Royalties Plc (AIM: TRR) has, this morning, announced the acquisition of two royalties and a production-linked milestone payment over the La Preciosa Silver Project, owned by Avino Silver & Gold Mines Ltd (TSX: ASM, mkt cap US$87m) in the State of Durango, Mexico. The consideration consists of US$7m cash to Coeur Mining (NYSE: CDE, mkcap US$1.1bn) on closing with a further US$1m in either cash or shares at Trident's election upon receipt of the milestone payment. The acquisition is Tride

Morning Note – 30 May 2023

NewRiver REIT+ (NRR, House Stock at 83p) - Final results preview

Early Mover in UK Lab-grown Meat

BSF Enterprise Plc (BSF) is a biotechnology company focused on acquiring, combining, and building businesses in the lab-grown tissue space. It aims to achieve this through an acquisition-led growth strategy and has already acquired the tissue engineering and cellular agriculture company, 3D Bio Tissues.

LSE AIM - Market Screener (30 May 2023)

 The market capitalization of AIM stocks was £95.9bn as of 26 May 2023, down 3.7% since 14 April 2023. Among the top YTD winners, there were Celadon Pharmaceuticals (up 216.6%), Vast Resources (+325% YTD), B90 Holdings (+212.4%), Verditek (209.1%, MktCap £7.5mn), Star Phoenix Group (+175%), Inspecs Group (+166.3%). Among the bottom movers, were companies canceling admission to AIM: Applied Graphene Materials (-88%,), Circle Property (-93%, MktCap £1.2mn), Purplebricks Group (-93.1% on a possi

Very strong CY22 - CY23 upgraded 10%

Trading update indicates strong FY23 performance

XPS CMD articulates growth potential