Supermarket Income REIT expands into Europe after buying stores from French retailer in £64m deal

Supermarket Income REIT has acquired a portfolio of popular supermarkets in France for €75.3m (£64.4m), reflecting a net initial yield of 6.3 per cent. 

On Monday, the London-listed firm said it bought 17 Carrefour supermarkets across the region.

The stores have an average gross internal area of c.40,000 sq ft, with a “long history of successful trading and form a key part of Carrefour’s “drive” online grocery fulfilment network within their respective catchments”.

Carrefour is one of the largest grocers in the world, achieving total sales of €94bn (£80bn) in the last financial year. 

The multinational operates across 30 countries and is the second-largest grocer in France with a 20 per cent market share and has a Baa1 credit rating from Moody’s.

Ben Green, director of Atrato Capital Limited, the investment adviser to Supermarket Income REIT, said:   “We are delighted to have completed this strategic sale and lease back transaction with Carrefour, one of the largest grocers in the world. 

“The transaction represents the company’s first investment in the €284bn (£242bn) French grocery real estate market.”

He added: “This accretive transaction is complementary to our existing portfolio, providing further tenant diversification and continues our strategy of investing in the future model of grocery.”

To fund the acquisition, the company has drawn €81.7m (£94m) from its existing HSBC revolving credit facility having also increased the total size of the facility by £25m. 

They added: “The cost of this new Euro denominated borrowing is 1.70 per cent over EURIBOR, with the acquisition providing an attractive earnings spread over the long-term cost of the Euro denominated borrowings. The Company’s pro-forma net LTV following the acquisition is 37 per cent”