Supermarket Income Reit Plc · LSE:SUPR
Supermarket Income Reit — FY2024 Earnings Presentation
45 slides from Supermarket Income Reit's earnings presentation, Sep 18, 2024
Slide 1: Full Year Results Presentation
FULL YEAR RESULTS PRESENTATION SUPR Primary 1 #405268 FOR THE 12 MONTHS TO 30 JUNE 2024 18 SEPTEMBER 2024 INVESTING IN THE FUTURE OF GROCERY
Slide 2: Agenda and Presenting Team
Agenda and Presenting Team Welcome and introduction Financial results Ben Green Michael Perkins Sustainability SUPR Primary 1 Principal Finance Director #405268 Grocery market & portfolio Investment market Q&A Isabelle Smith Robert Abraham Head of Sustainability Fund Manager 2
Slide 3: Strong operational performance
Accretive Strong acquisitions Delivering operational SUPR Primary 1 in UK and #405268 earnings growth performance France 3
Slide 4: Financial Results
Financial Results SUPR Primary 1 #405268 Photo: Tesco, Colchester 4
Slide 5: Financial highlights - 12 months to June 2024
Financial highlights - 12 months to 30 June 2024 £107m 6.1p 1.01x Net rental Adjusted Dividend income EPS cover(1) £1.8bn 87p 37% Portfolio EPRA NTA Loan to value per share Value Past performance is not indicative of future results Photo: Tesco, Stoke-on-Trent 1) Calculated as Adjusted EPRA earnings
Slide 6: Income statement
Income statement Twelve months to Twelve months to 30-June-24 30-June-23 Change £m £m Net rental income 107.2 95.2 +13% Net income from joint venture - 11.7 Administrative & other expenses (15.2) (15.4) -1% Net finance expense(1) SUPR Primary 1 (16.2) (19.1) -15% #405268 Adjusted earnings(2) 75.8 72
Slide 7: Annualised passing rent
£13m increase in passing rent 2.9 113.1 4.4 5.2 4.0% avg. rental uplift(1) Annualised passing rent (£m) 100.6 SUPR Primary 1 #405268 30 June Acquisitions Acquisitions LFL rental 30 June 2023 (UK) (France) uplift 2024 Past performance is not indicative of future results 1) Average rental uplift based
Slide 8: Strong operational performance
Strong operational performance 100% 100% SUPR Primary 1 >99% Occupancy(1) #405268Rent Gross to collection(1) net margin Photo: Tesco, Stoke-on-Trent 1) Subject to rounding 8
Slide 9: Administrative expenses
Administrative expenses Twelve months to Twelve months to 30-June-24 30-June-23 Change £m £m Net rental income 107.2 95.2 +13% Net income from joint venture - 11.7 Administrative & other expenses (15.2) (15.4) -1% Net finance expense(1) SUPR Primary 1 (16.2) (19.1) -15% #405268 Adjusted earnings(2)
Slide 10: One of the lowest EPRA cost ratios in the sector
One of the lowest EPRA cost ratios in the sector 59% EPRA cost ratio SUPR Primary 1 #405268 14.7% 11% Peer 1 Peer 2 Peer 3 Peer 4 SUPR Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12 Peer 13 Peer 14 Peer 15 current Internally managed Externally managed SUPR’s EPRA cost ratio improved 80bp
Slide 11: 4.4% growth in Adjusted Earnings per Share
4.4% growth in Adjusted Earnings per Share 0.3p 6.1p 5.8p (0.9)p 0.9p SUPR Primary 1 #405268 30 June Sale of 26 Increase in Net interest and 30 June 2023 Sainsbury’s rent roll administrative 2024 JV stores expense(1) Past performance is not indicative of future results 1) Net finance expense is adju
Slide 12: Fully covered dividend
Fully covered dividend Twelve months to Twelve months to 30-June-24 30-June-23 Change £m £m Net rental income 107.2 95.2 +13% Net income from joint venture - 11.7 Administrative & other expenses (15.2) (15.4) -1% Net finance expense(1) SUPR Primary 1 (16.2) (19.1) -15% #405268 Adjusted earnings(2) 7
Slide 13: Robust balance sheet
Robust balance sheet As at As at 30-June-24 30-June-23 Change £m £m Portfolio valuation(1) 1,776 1,693 +5%(2) Cash and cash equivalents 39 37 Other assets 12 143 Borrowings SUPR Primary 1 (694) (667) #405268 Prepaid rents and other liabilities (48) (49) EPRA net tangible assets (NTA) 1,085 1,157 -6%
Slide 14: Portfolio valuation (£m)
Valuations stabilised in H2 100 1 1,776 36 (54) 1,693 1,675 Portfolio valuation (£m) SUPR Primary 1 #405268 30 Jun H1 H1 valuation 31 Dec H2 H2 valuation 30 Jun 2023(1) acquisitions(2) movement 2023(1) acquisitions movement(2) 2024(1) 1) Per independent property valuation which includes the market v
Slide 15: £275m of debt refinancings
£275m of debt refinancings(1) Average maturity(1),(2) New 4.0 years facilities(1) % Fixed(1),(3) 100 100% Committed facilities (£m)(1) Average debt cost(1),(4) SUPR Primary 1 3.8% #405268 Net debt / EBITDA 39 105 250 7.1x Fitch Rating 87 BBB+ 75 70 50 50 (stable) Loan to Value FY24 FY25 FY26 FY27 FY
Slide 16: Accessing attractively priced institutional debt
Accessing attractively priced institutional debt Tenor 7.0 years Facility size €83m Committed facilities (£m)(1) Fixed rate SUPR Primary 1 4.4% #405268 Oversubscribed 1.5x Private placement New institutional lenders 70 3 % of group debt unsecured(1) FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 76% 1
Slide 17: Sustainability
Sustainability SUPR Primary 1 #405268 17
Slide 18: Sustainably investing in the future of grocery
Sustainably investing in the future of grocery Pillar 1 Pillar 2 Pillar 3 Tenant & Climate & Responsible Community Environment Business Engagement SUPR Primary 1 #405268 Net Zero by 2050 52% actual electricity Gender equality commitment consumption data from on the Board supermarket tenants(1) Scien
Slide 19: Commitment to Net Zero by 2050
Commitment to Net Zero by 2050 SUPR’s Science Based Targets Reduce Reduce scope 1 & 2 scope 1, 2 & 3 emissions emissions 42% 90% by 2030(1) by 2050(1) SUPR Primary 1 #405268 Ambitious tenant commitments Carbon neutrality or net zero across own operations by 2035(2) 1) From a 2023 base year 2) Tesco
Slide 20: Tenant investments are driving EPC upgrades
Tenant investments are driving EPC upgrades Sainsbury’s Tesco Waitrose Cheltenham Bristol Sudbury SUPR Primary 1 #405268 Multi-million pound net zero Heating decarbonisation through Full store refit – first store to trial new investment installation of new heat pump Waitrose layout technology Integr
Slide 21: Grocery market & portfolio
Grocery market & portfolio SUPR Primary 1 #405268 Photo: Tesco, Thetford 21
Slide 22: UK grocery is a strong growth sector
UK grocery is a strong growth sector +35% Since IPO 270 259 +5% CAGR 252 238 UK grocery market size (£bn) 217 208 210 189 192 185 SUPR Primary 1 #405268 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 5.8% grocery market sales growth (2024) Source: IGD Grocery market sales data. 2017 to 2023 actua
Slide 23: Online grocery returns to growth
Online grocery returns to growth Return to Pandemic growth peak 26.4 25.2 24.4 Online grocery market size (£bn)(1) 23.1 22.3 22.0 20.9 SUPR Primary 1 #405268 12.5 10.6 9.8 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 55% Tesco & Sainsbury’s online market share(2) 1) Source: IGD Grocery market s
Slide 24: Discounters reaching maturity phase
Discounters reaching maturity phase Discounters - Number of stores 1,993 2,022 1,818 1,902 1,662 1,713 1,521 2017 2018 2019 2020 2021 2022 2023 Lidl Aldi SUPR Primary 1 #405268 Net new store openings 121 111 105 91 81 84 29 2017 2018 2019 2020 2021 2022 2023 Source: IGD. Number of stores and new sto
Slide 25: Strong tenant performance: sales growth
Strong tenant performance: sales growth +11.0% +10.3% +8.2% +7.7% Annual sales growth(1) Annual sales growth(1) SUPR Primary 1 #405268 UK Large format stores UK Large format stores 1) Sources: Sainsbury’s 2023/24 full year results and Tesco 2023/24 full year results 25
Slide 26: Significant tenant investment into store estate
Significant tenant investment into store estate Annual capital expenditure (£m) Forecast Annual capital expenditure (£m) Forecast(1) 1,314 1,400 1,235 920 717 814 FY22/23 FY23/24 SUPR FY24/25Primary 1 FY22/23 FY23/24 FY24/25 #405268 Solar rollout EV charging Energy efficiency Store refurbishment For
Slide 27: Long-term tailwinds for market rental growth
Long-term tailwinds for market rental growth Increased sales Outsized Challenges of in-store growth in large opening new and online store sales stores SUPR Primary 1 #405268 Market rental growth for omnichannel stores Photo: Sainsbury’s, Newcastle 27
Slide 28: Portfolio let to leading supermarket operators
Portfolio let to leading supermarket operators Exposure by value(1) 48% 29% 5% 4% 4% £1.8bn total value 2% SUPR Primary 1 1% #405268 1% Map locations are Non-grocery 6% indicative only. 73 5.9% 93% 77% Supermarkets Net Initial Omnichannel Tesco and Yield stores(1) Sainsbury’s(1) 1) Weighted by value
Slide 29: Consistent investment strategy in Europe
Consistent investment strategy in Europe UK France/Carrefour 3% market Growth market CAGR(1) Online growth through 6% online omnichannel stores CAGR(2) SUPR Primary 1 Leading operators with #405268 20% market strong market share share(3) Investment grade BBB tenant covenants rating Investment in sto
Slide 30: French grocery is a strong growth sector
French grocery is a strong growth sector +20% Since IPO French grocery market sales (€bn) +3% CAGR 305 297 284 290 275 255 261 243 246 239 SUPR Primary 1 #405268 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Source: IGD, French Grocery Market (2017-2023 actuals, 2024-2026 forecast) 30
Slide 31: French online market is permanently enlarged
French online market is permanently enlarged 16.0 15.1 14.0 14.3 French online grocery spend (€)bn 13.3 12.9 11.9 SUPR Primary 1 8.5 #405268 7.4 6.8 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 80% Click & Collect online market share Source: IGD, French Grocery Market (2017-2023 actuals, 2024-2
Slide 32: Carrefour: a strong tenant covenant
Carrefour: a strong tenant covenant Global operator of significant scale 7th largest grocer BBB in the world Investment grade €100bn+ sales (2024)(1) rated SUPR Primary 1 #405268 Online core to strategy €3bn online 3x online sales capex plan(2) growth target(2) 1) IGD Research 2024 (forecast) 2) Car
Slide 33: Similarly concentrated market to UK
Similarly concentrated market to UK UK: Top 6 market share: 83% Other 27.7% 15.3% 12.7% 10.0% 8.7% 8.1% 17.5% SUPR Primary 1 #405268 France: Top 6 market share: 89% Other 24.1% 24.1% 19.6% 19.6% 17.1% 17.1% 12.0% 12.0% 8.5% 8.0% 10.7% Source: Kantar Grocery Market Shares, UK & France (12 weeks endin
Slide 34: €75m off-market transaction with Carrefour
€75m off-market transaction with Carrefour 6.3% 4.4% 17 Net Initial Cost of Omnichannel Yield(1) debt(2) stores SUPR Primary 1 #405268 12 yrs €7 2.1% annual inflation Ave. rent Ave. rent linked lease(3) per sq.ft to turnover 1) Net initial yield is net of standard purchaser costs 2) 3) Cost of debt
Slide 35: Earnings accretive opportunities in France
Earnings accretive opportunities in France Carrefour Abbeville Investment characteristics Acquired April 2024 Strong trading 12-year WAULT 6.3% NIY Omnichannel Annual ILC (uncapped) Annual, inflation-linked Store characteristics C&C SUPR Primary 1 2.1% C&C #405268 online Petrol Rent to turnover stat
Slide 36: Investment market
Investment market SUPR Primary 1 #405268 Photo: Tesco, Newmarket 36
Slide 37: Supermarket property remains liquid
Supermarket property remains liquid £2.1bn £2.0bn £1.8bn £1.7bn £1.6bn Investment volumes SUPR Primary 1 #405268 2020 2021 2022 2023 2024 UK supermarket investment volumes. Years ending 30 June Source: Knight Frank, Savills, MSCI, operator announcements Atrato Capital research 37
Slide 38: Significant sale and leaseback volumes in 2024
Significant sale and leaseback volumes in 2024 £2.1bn £2.0bn £1.8bn £1.7bn c. £1bn £1.6bn Investment volumes primary sale and leaseback activity SUPR Primary 1 #405268 2020 2021 2022 2023 2024 Other Asda SLB(SLB) UK supermarket investment volumes. Years ending 30 June Source: Knight Frank, Savills,
Slide 39: SUPR's addressable market
SUPR’s addressable market Primary opportunity set Sub investment Strategy Long lease Europe Regear opportunity grade Operators NIY(1) 5.3% 6.5% 6.3% 7.0% SUPR Primary 1 #405268 Spread to cost - 1.2% 2.1% 1.7% of debt(2) Earnings accretive Covenant strength Targets are based on estimates, opinions an
Slide 40: SUPR's addressable market
SUPR’s addressable market Primary opportunity set Sub investment Strategy Long lease Europe Regear opportunity grade Operators NIY(1) 5.3% 6.5% 6.3% 7.0% SUPR Primary 1 #405268 Spread to cost - 1.2% 2.1% 1.7% of debt(2) Earnings accretive Covenant strength Targets are based on estimates, opinions an
Slide 41: Earnings accretive opportunities in the UK
Earnings accretive opportunities in the UK Tesco Stoke Investment characteristics Acquired March 2024 Strong trading 11-year WAULT 7.5% NIY Omnichannel Annual RPI (0%-4%) Annual, inflation-linked Store characteristics Petrol station SUPR Primary 1 #405268 Q1 5 Trading density Delivery vans Home deli
Slide 42: Outlook
Outlook Positive Market SUPR Primary 1 Capital macro rental #405268 discipline backdrop growth Photo: Tesco, Newmarket 42
Slide 43: Q&A
Q&A SUPR Primary 1 #405268 Photo: Sainsbury’s, Ashford
Slide 44: Important Information
Important Information THIS PRESENTATION IS STRICTLY CONFIDENTIAL AND IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION AND MAY NOT BE REPRODUCED, REDISTRIBUTED, COPIED OR PUBLISHED (IN WHOLE OR IN PART) TO ANY OTHER PERSON FOR ANY PURPOSE. ANY RECIPIENT OF THIS PRESENTATION AGREES TO KEEP PERMANE
Slide 45: Important Information
Important Information The information contained in this presentation has not been independently verified by the Company, Atrato or any other person, and some of the information is still in draft form. No representation, warranty or undertaking, express or implied, is made by the Company, Atrato or a
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