Supermarket Income REIT - Progressive dividend policy remains in place

With its focus on high-quality omnichannel supermarkets, Supermarket Income REIT (SUPR) is very well positioned to benefit from strong growth trends in the grocery sector, supportive of its income proposition and capital values. The company is confident that the targeted FY24 DPS of 6.06p (+1%) will be fully covered as adjusted earnings benefit from rental growth, cost efficiency and fixed debt costs.

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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.

Morning Note – 22 April 2024

Benefits of scale set to materialise

Frenkel Topping - Resilient with strong growth potential

FY 2023 was a challenging year for Frenkel with higher interest rates encouraging clients to place money into lower margin money market funds. Despite this, sales grew +32% (supported by recurring revenue +9% and +51% in non-recurring), EBIT margins remained strong at 22% and adj. EPS grew +17% (taking into account the higher number of shares). FY 2024 has seen a solid start to transactional business and there is a strong pipeline of new FUM opportunities both of which support further growth. Wi

S&U - PBT ahead, encouraging volume trends

S&U reported FY24 PBT of £33.6m, down from £41.4m in FY23 on higher funding and regulatory costs and higher impairments in Advantage in H2. PBT was 2% ahead of our forecast as stronger revenues – up 12% to £115.4m – and better costs offset higher-than-expected impairments. Net receivables grew to a record at both Advantage and Aspen and management noted particular strength in Q4 and a good trading environment in the current year. Having absorbed a significant rise in funding cost as well as addi

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

Foresight Solar Fund - Termination of coverage

Edison Investment Research is terminating coverage on ABC Arbitrage (ABCA), paragon (PGN), Foresight Solar Fund (FSFL), Kendrion (KENDR), Lithium Power International (LPI), Triple Point Energy Transition (TENT), 4iG (4IG), e-therapeutics (ETX), Pharnext (ALPHA) and Shield Therapeutics (STX). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our web

International Public Partnerships - Consistently and responsibly delivering

International Public Partnerships’ (INPP’s) FY23 results show that it continues to deliver consistent and predictable returns for investors, while delivering environmental and social benefits for the individuals and communities that are served by its assets. Despite this strong performance and a substantial need for private infrastructure funding, the macroeconomic environment has weighed on INPP’s share price, in common with the wider sector. Regardless, attractive returns are available from th

Regional REIT - Performing as expected ahead of refinancing

In a challenging market, Regional REIT’s (RGL’s) FY23 operational and financial performance was robust, in line with expectations and previous guidance. Investor focus remains on the company’s loan to value (LTV) reduction and bond refinancing plans, explored in detail in our previous note and RGL will provide an update on this in due course.

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Hybridan Small Cap Feast - 22 April 2024

22nd April 2024 * A corporate client of Hybridan LLP ** Arranged by type of listing and date of announcement *** Alphabetically arranged **** Potential means Intention to Float (ITF) has been announced Dish of the day Admissions: Delistings: What’s baking in the oven? ** Potential**** Initial Public Offerings: Reverse Takeovers: 16 April 2024: Electric Guitar (ELEG.L) Concurrent with its Admission to trading on AIM, Electric Guitar is proposing to acquire the entire issued share capital of 3radi

Witan

Business as usual for WTAN’s executive team, while the board reviews investment management arrangements…

Foxtons Group (FOXT LN) - 1Q24 IMS shows real momentum

Foxtons Group plc first quarter revenue rose 9% to £35.7m (1Q23: £32.9m) with growth delivered across all business segments. Trading is in line with management's expectations.

The Hardman & Co Monthly: April 2024

Feature article: Steady as she goes, but could be better: A review of investment company liquidity since 2016 Liquidity is the lifeblood of equity markets. The measurement of liquid asset availability to a market or company is a way of gauging a market’s health. This article builds on our previous work, which analysed the liquidity data for non-financial trading companies, by applying the same analytical techniques to the investment companies (IC) space. We analyse liquidity for ICs as a whol

H&T Group (HAT): Core franchise build, short-term retail noise

In our 15 March 2023 initiation, 'Pawnbroking royalty, with strong, profitable growth', and subsequent notes, we have highlighted the strong market for pawnbroking and why H&T, as the market leader, is uniquely placed to take advantage of these opportunities. These results reconfirmed both, with the pledge book up 28% and net pawnbroking revenue up 36%. Like many in the retail space, H&T faced the challenge of customers focusing on lower-value, lower-margin items in the key run-up to Christmas 2