Supermarket Income's Blue Owl deal is sensible, say analysts
Published: 08:52 24 Apr 2025 EDT
The deal between Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) and Blue Owl Capital is a sensible move with clear merits, analysts said.
SUPR formed a 50:50 joint venture with the US investment firm, transferring eight omnichannel supermarket assets valued at £403 million into the structure, generating around £200 million in net cash for the REIT with proceeds to be used to reduce leverage and support future acquisitions.
"The strategic merits of the transaction are clear," said broker Panmure Gordon, "it allows SUPR to recycle capital at a premium, reduce near-term balance sheet risk, and participate in the future growth of a scalable platform."
Overall, the broker added, the deal appears to be "incrementally positive" for SUPR shareholders.
With SUPR retaining a 50% economic interest, earning a 0.6% annual management fee and possible performance fees, analysts at Peel Hunt said: “Overall, this seems like a sensible move, with the REIT benefiting from fees, additional scale, and fresh capital.”
SUPR’s group loan-to-value will fall to 31%, down from 38% at the end of December 2024.
The joint venture is expected to grow to around £1 billion, targeting high-yielding supermarkets and for leverage to be around 55%.
Peel Hunt noted that the REIT's shares trade at an 11% discount to spot NAV and offer a 7.9% yield. The broker has an 'add' rating and a target price of 85p.
Panmure's rating is 'hold' and a TP of 75p.
