Supermarket Income REIT, the UK supermarket real estate investor, has acquired the Sainsbury’s supermarket in Preston, Lancashire from Legal & General for £54.4 million (excluding acquisition costs), reflecting a net initial yield of 5.1%.
Originally developed in 1992, and extensively refurbished in 2010, Sainsbury’s has a long history of trading from this prominent 10 acre site adjacent to Preston town centre. The supermarket comprises 78,000 sq ft net sales area with a 12-pump petrol filling station, 520 parking spaces and purpose built online fulfilment distribution docks supporting Sainsbury’s online grocery business across the region.
It is being acquired with an unexpired lease term of 22.5 years with annual, upward-only, RPI-linked rent reviews (subject to a 4% cap and 1% floor).
The Company has also arranged a new five-year, interest-only, term loan facility with Dekabank. This £47.6 million facility is attractively priced with a fixed rate equal to a 1.35% margin over 3 month LIBOR which is currently equivalent to a total cost of 2.0%. It is secured against the Sainsbury’s supermarket in Preston and the Tesco supermarket in Mansfield acquired in April 2019. The facility also includes a £40 million uncommitted accordion option for the term of the facility.
Ben Green, Director of Atrato Capital, the Investment Advisor to Supermarket Income REIT, said:
“This Sainsbury’s supermarket is a great addition to our growing portfolio of omnichannel stores. The property has very attractive lease terms, strong fundamentals and provides further diversification to the portfolio.
“We are delighted to have secured Dekabank as a new lender to the Group. Our new facility provides us with very competitively-priced, five-year funding with room to grow to support the Company’s future investment requirements”.
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