Supermarket Income REIT PLC (LSE: SUPR) deployed £676 million into earnings-accretive acquisitions during the fiscal year ended June 30, 2026, driving a 37% increase in portfolio value to £2.2 billion when including its joint venture stake with Blue Owl.
Total capital deployed during the year stood at £454 million at a 6.5% net initial yield. A separate £100 million equity raise was fully deployed within two months, funding nine grocery properties totaling £222 million — 82% by rent rated investment-grade, 87% inflation-linked, with a net initial yield of 6.6%.
Net rental income, proportionally consolidated, rose 6% to £122 million. Passing rent grew 23%, rising from £117.0 million before the joint venture in May 2026 to a pro-forma £144.3 million following post-year-end acquisitions. Dividends will see a sustainable 2% increase for FY27.
EPRA earnings per share declined 4% to 5.7 pence, impacted by a temporary cash drag of 0.3 pence and a higher weighted average debt cost of 0.4 pence. EPRA net tangible assets per share edged up 0.4% to 87.5 pence. Total accounting return was 7.5%, up 30 basis points, with 90% derived from income and 10% from capital returns.
The joint venture with Blue Owl reached a scale of £855 million. Management has set a target to double the portfolio from approximately £2 billion to £4 billion over time.
Total debt financings of £1 billion were executed, including public bond issuance. The company holds bond issuances of £219 million due FY27 and £250 million due FY32, alongside US private placement notes of £268 million due FY29. Weighted average debt maturity extended to 3.6 years from 2.8 years in June 2025, with a weighted average cost of approximately 4.4%. Ninety-eight percent of debt is fixed or hedged until June 2028.
Loan-to-value stood at 45% on a pro-forma basis, well below the 60% covenant, while net debt to EBITDA was 7.8x against a 9.0x rating sensitivity threshold. The BBB+ credit rating was maintained, with management expecting to operate between 7x and 8x through the cycle.
Capital recycling generated a 120 basis point spread between disposal yields of 6.2% and redeployment yields of 6.8%, supplemented by a 60 basis point management fee benefit that translates to 0.3 pence per share of annual net income accretion.
Portfolio composition is shifting toward diversification. UK foodstores are targeted to fall from 83% to 65% of the portfolio, European foodstores to rise from 10% to 15%, grocery-anchored retail parks to increase from 7% to 10%, and a new 10% allocation is planned for grocery distribution. The company will maintain approximately 90% grocery income exposure, a weighted average unexpired lease term of around 12 years, roughly 80% inflation-linked income, and about 70% investment-grade tenant income.
Acquisition breakdown included £508 million in UK foodstores, £109 million in European direct sale-and-leaseback deals, £44 million in grocery-anchored retail parks, and £15 million in grocery distribution facilities. Overall acquisition metrics showed a weighted 6.5% net initial yield, 13-year WAULT, 94% inflation-linked rent reviews, and 74% investment-grade income.
Occupancy and rent collection both remain at 100%, with investment-grade exposure at 75%. Gross-to-net rent ratio stands at 99.5%.
Cost efficiency improved sharply. The EPRA cost ratio fell 380 basis points to 9.2%, down from 13.6% prior to internalization, with management targeting sub-9% in FY27. Estimated cost savings since the 2024 internalization total approximately £4 million.
Tenant concentration is anchored by Tesco, which accounts for 39% of rent, followed by Sainsbury’s at 25%. Kantar data for the 52 weeks ended June 14, 2026, shows Tesco commanding 28.1% market share with £44 billion in annual sales and 37% of the online grocery market.
Store sales grew 18% from February 2023 to February 2026, while inflation-linked rent reviews rose 12%, improving the rent-to-turnover ratio from 4.1% to 3.9%. Online sales grew 11.2%, large-format store sales increased 3.9%, and convenience formats grew 0.3%. Approximately 89% of the portfolio by value comprises omnichannel stores.
A specific highlight was the Bristol retail park acquisition, where a forward funding arrangement with Lidl has generated an 8% yield on cost, achieved 100% occupancy, extended the WAULT by over six years, boosted rental income by £400,000, and delivered a 10% valuation increase as of June 30, 2026, versus the December 2022 acquisition valuation.
