Supermarket Income Reit Plc · LSE:SUPR
Supermarket Income Reit — H1 FY2025 Earnings Presentation
39 slides from Supermarket Income Reit's earnings presentation, Mar 11, 2025
Slide 1: Interim Results Presentation
INTERIM RESULTS PRESENTATION SUPR Primary 1 #405268 FOR THE 6 MONTHS TO 31 DECEMBER 2024 11 MARCH 2025 INVESTING IN THE FUTURE OF GROCERY
Slide 2: Agenda and Presenting Team
Agenda and Presenting Team Welcome and introduction Financial results Nick Hewson Robert Abraham Delivering on our strategic initiatives SUPR Primary 1 Chair Fund Manager #405268 Investment market Q&A Michael Perkins Finance Director 2
Slide 3: Operational performance supported by resilient sector
Operational Significant Internalisation: performance progress SUPR Primary 1 on key well positioned #405268 supported by strategic for future resilient sector initiatives growth Photo: Tesco, Prescot 3
Slide 4: Financial Results
Financial Results SUPR Primary 1 #405268 Photo: Tesco, Colchester 4
Slide 5: Growing earnings and robust balance sheet
Growing earnings and robust balance sheet £58m 13.6% 3.0p +10% -1.5% +3% Net rental EPRA Cost Adjusted income Ratio EPS £1.8bn 88p 38% +0.5% LFL +0.6% Portfolio EPRA NTA Loan to value per share Value(1) Past performance is not indicative of future results Photo: Sainsbury’s, Ashford All figures as a
Slide 6: 10% increase in net rental income
10% increase in net rental income Six months to Six months to 31-Dec-24 31-Dec-23 Change £m £m Net rental income 57.8 52.6 +10.0% Administrative & other expenses(1) (7.5) (7.6) Net finance expense(2) (12.9) (8.7) Adjusted earnings(3) SUPR Primary 1 37.4 36.3 #405268 Gross to net rent margin 99.4% 99
Slide 7: Driven by growth in passing rent
Driven by growth in passing rent 1.6 118.5 (0.1) 3.9 3.0% avg. Annulaised passing rent (£m) rental uplift(1) 113.1 SUPR Primary 1 #405268 30 June 2024 Sainsbury's LFL rental uplift Other 31 December 2024 Huddersfield Past performance is not indicative of future results 1) Average rental uplift based
Slide 8: Tight cost control and improving cost ratio
Tight cost control and improving cost ratio Six months to Six months to 31-Dec-24 31-Dec-23 Change £m £m Net rental income 57.8 52.6 Administrative & other expenses(1) (7.5) (7.6) -1.9% Net finance expense(2) (12.9) (8.7) Adjusted earnings(3) SUPR Primary 1 37.4 36.3 #405268 Gross to net rent margin
Slide 9: One of the lowest EPRA cost ratios in the sector
One of the lowest EPRA cost ratios in the sector 59.3% EPRA cost ratio (%) SUPR Primary 1 #405268 13.6% <9.0% 7.6% Peer 1 SUPR 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 target current Internally managed Externally managed Peer group
Slide 10: Finance costs have risen due to higher LTV
Finance costs have risen due to higher LTV Six months to Six months to 31-Dec-24 31-Dec-23 Change £m £m Net rental income 57.8 52.6 Administrative & other expenses(1) (7.5) (7.6) Net finance expense(2) (12.9) (8.7) +49.5% Adjusted earnings(3) SUPR Primary 1 37.4 36.3 #405268 Gross to net rent margin
Slide 11: 3% growth in Adjusted Earnings
3% growth in Adjusted Earnings 45.0 5.2 0.1 40.0 37.4 36.3 (4.2) 35.0 30.0 Adjusted earnings (£m) 25.0 Organic growth and accretive acquisitions SUPR Primary 1 more than offset higher #405268 20.0 debt costs 15.0 10.0 5.0 - 31 December Increase in Change in (1) Finance (2) 31 December 2023 rent roll
Slide 12: Robust balance sheet
Robust balance sheet As at As at 31-December-24 30-June-24 £m £m Portfolio valuation(1) 1,833 1,776 Cash and cash equivalents 41 39 Other assets 11 12 SUPR Primary 1 Borrowings #405268 (745) (694) Prepaid rents and other liabilities (49) (48) EPRA net tangible assets (NTA) 1,091 1,085 EPRA NTA per s
Slide 13: Increased EPRA NTA over the period
Increased EPRA NTA over the period 3.0p Pence per share (p) 0.7p 88p 87p (0.1)p (3.0)p SUPR Primary 1 #405268 30 June Adjusted Dividends Portfolio Other 31 December 2024 earnings paid revaluation 2024 4.1% total accounting return – 85% from income Past performance is not indicative of future results
Slide 14: Strong balance sheet – BBB+ credit rating
Strong balance sheet – BBB+ credit rating Average maturity(1),(2) 3.7 years 100 % unsecured 87% Committed debt (£m) SUPR Primary 1 % Fixed(1),(3) #405268 93% 105 250 Average debt cost(1) 39 101 4.0% 75 55 50 50 Loan to Value(1) FY25 FY26 BLB FY27 Wells Fargo HSBC FY28 FY29 Unsecured club FY30 SMBC F
Slide 15: Significant progress on key strategic initiatives
Significant progress on key strategic initiatives Cost Lease Capital Joint Reductions Renewals Recycling Venture Management fee 15-year leases £64 million Further capital cut - £2m (RPI) disposals recycling saving(1) opportunity 35% aboveSUPR Primary 1 MSCI £80 million Internalisation - index(3) #40
Slide 16: Cost Reductions
Cost Lease Capital Joint Reductions Renewals Recycling Venture SUPR Primary 1 #405268 16
Slide 17: Internalisation delivers significant benefits for SUPR
Internalisation delivers significant benefits for SUPR Material cost savings of at least £4 million per annum(1) New EPRA cost ratio target < 9%, one of the lowest in the sector(1) Greater balance sheet flexibility and optionality including long dated debt SUPR Primary 1 #405268 Increased alignment
Slide 18: Highest return on capital allocation
Highest return on capital allocation 19% 8% 9% Internalisation Buyback Unlevered IRR on yield(1) yield(2) acquisitions(3) Internalisation is the most accretive capital allocation option 1) Based off £20.8m of deployment. Internalisation assumes saving of £4m and 3.1% transaction cost. 2) Buyback ass
Slide 19: Lease Renewals
Cost Lease Capital Joint Reductions Renewals Recycling Venture SUPR Primary 1 #405268 19
Slide 20: Evidencing higher affordable rents
Evidencing higher affordable rents Renewal of the three shortest leases in the portfolio Bracknell 15 yrs Annual inflation-linked uplifts(1) 20% Average passing rent reduction Bristol 4% Rent to turnover(2) Thetford 35% Above MSCI Supermarkets ERV(3) 13% Valuer’s ERV(3) 1) Subject to 4% cap and 0% f
Slide 21: Omnichannel stores: higher affordable rents
Omnichannel stores: higher affordable rents Delivering outsized revenue growth(1) Turnover growth above rents(2) 9.3% 4.9% T/o growth & rental growth (%) 4.0% Revenue Growth (%) SUPR Primary 1 #405268 4.2% 0.5% Convenience Large format Online Rental Growth T/o growth 1) Tesco Interim Results 24/25 –
Slide 22: Capital Recycling
Cost Lease Capital Joint Reductions Renewals Recycling Venture SUPR Primary 1 #405268 22
Slide 23: Delivering on capital recycling
Delivering on capital recycling Selling above book value, supporting portfolio valuation Redeploying capital to enhance earnings Maintaining robust tenant credit strength 23
Slide 24: Selective disposals of lower yielding assets
Selective disposals of lower yielding assets Highlights the critical nature of omnichannel store estate to operators Newmarket Sold at 7.4% premium to book value(2)(3) £63.5m - 5.2% NIY(1) Proceeds provide optionality for redeployment(3) 1) Assuming standard property purchaser's costs of 6.8% 2) Boo
Slide 25: Enhancing earnings through accretive acquisitions
Enhancing earnings through accretive acquisitions Huddersfield 106k sq.ft. GIA 1.6% spread to cost of debt(3) Investment grade Omnichannel £49.7m – 7.6% NIY(1) Portfolio 40k sq.ft. GIA(4) 2.7% spread to cost of debt(5) Investment grade Omnichannel €36.7m – 6.8% NIY(2) 1) Assuming purchaser's costs o
Slide 26: Joint Venture
Cost Lease Capital Joint Reductions Renewals Recycling Venture SUPR Primary 1 #405268 26
Slide 27: Joint Ventures provide further strategic benefits
Joint Ventures provide further strategic benefits Single store sales Joint Ventures Supporting valuation Driving NTA growth Financial flexibility Reduced LTV provides capacity SUPR Primary 1 #405268 Scale through third party capital Supporting investment thesis Management fee Additional earnings gen
Slide 28: Investment Market
Investment Market SUPR Primary 1 #405268 Photo: Sainsbury’s, Ashford 28
Slide 29: Supermarket investment yields have peaked
Supermarket investment yields have peaked 8.0% 7.6% 7.0% 6.3% MSCI Supermarkets 6.3% 6.0% 6.0% SUPR NIY(1) Net Initial yield (%) MSCI All Property 5.0% 5.0% 4.0% 3.0% 2.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 MSCI NIY December 2004
Slide 30: Supermarket yields supported by transactions
Supermarket yields supported by transactions Sainsbury’s Sainsbury’s Tesco Wantage Halifax Congleton £38.1m £43.0m £20.6m 4.6% 25yrs 6.1% 14yrs 7.0% 7yrs NIY WAULT NIY WAULT NIY WAULT Purchaser Competition for assets provide upwards pressure on portfolio valuations NIY based off purchaser’s costs of
Slide 31: SUPR's investment case
SUPR’s investment case Defensive sector, resilient throughout economic cycles Highly secure income – 79% investment grade(1) SUPR Primary 1 #405268 Excellent visibility of income – 12 year WAULT(2) with 81% inflation-linked(3) Future proofed stores acting as last mile omnichannel fulfilment hubs Gro
Slide 32: Well positioned for future growth
Well positioned for future growth Focus on Targeting Resilient and enhancing SUPR Primary 1 further progress highly attractive earnings and #405268 on strategic grocery sector closing discount initiatives to NTA Photo: Tesco, Prescot 32
Slide 33: Key near term deliverables
Key near term deliverables Deliver Strategic JV and Refinancing of internalisation review SUPR Primaryof 1 capital #405268 debt and extend and pursue allocation maturity change of listing options 33
Slide 34: Q&A
Q&A SUPR Primary 1 #405268 Photo: Sainsbury’s, Ashford 34
Slide 35: Proposed Internalised structure: experienced team
Proposed Internalised structure: experienced team Management Team Board of Directors Nick Sapna Rob Abraham Mike Perkins Hewson Shah CEO CFO Chair SID • Fund Manager, for 3 years, • Finance Director, Jon Vince with Atrato for 6 years, Supermarkets, for 1 year Austen Prior helping grow SUPR’s • Previ
Slide 36: Delivering cost savings of at least £4m per annum
Delivering cost savings of at least £4m per annum FY24 adjusted for Pro-forma 12 Units: £000s Dec-24 IA fee Notes month run rate (3) change (1) Investment adviser fees 7,786 - Market cap based fee (2) Transferred management team, Salaries, social security costs - 4,200 allows for 50% vesting of LTIP
Slide 37: Portfolio let to leading supermarket operators
Portfolio let to leading supermarket operators 82 6.0% 94% 79% Supermarkets(1) Net Initial Omnichannel Investment Yield(2) stores(3) grade(3) Exposure by value(2) 45% SUPR Primary 1 #405268 32% 5% 5% 4% £1.8bn total value 2% 1% 1% Map locations are Non-grocery 6% indicative only. 1) Includes one sto
Slide 38: 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 39: 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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