Supermarket Income REIT plc has bought a portfolio of 17 Carrefour supermarkets in France through a sale and leaseback transaction for €75.3 million.
It is Supermarket Income REIT’s first investment in the French grocery sector. The purchase price, which excludes acquisition costs, reflects a net initial yield of 6.3%.
Strong-performing omnichannel Carrefour supermarkets
The strong-performing omnichannel supermarkets are geographically diversified, with most in northern France. They have an average gross internal area of around 40,000 square feet, with a long history of successful trading.
The SLB portfolio has been acquired with a weighted average lease term of 12 years (with a tenant-only break option in year 10) and also annual uncapped inflation-linked rent reviews.
Carrefour is one of the largest grocers in the world, achieving total sales of €94 billion in FY23. Carrefour operates across 30 countries and is also the second-largest grocer in France with a 20% market share.
Attractive earnings
To fund the acquisition, €75.3 million has drawn €81.7 million from its existing HSBC revolving credit facility having also increased the total size by £25 million. The cost of this new Euro-denominated borrowing is 1.70% 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%.
First investment in French grocery real estate market
Ben Green, Director of Atrato Capital Limited, the Investment Adviser to Supermarket Income REIT plc, says, “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 €284 billion French grocery real estate market.
“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.”
Supermarket Income REIT plc was advised by Rothschilds & Co, Simmons & Simmons and also Wargny Katz.
Supermarket Income REIT plc focuses on grocery stores which are omnichannel, fulfilling online and in-person sales. Its supermarkets are let to leading supermarket operators in the UK and Europe, diversified by both tenant and geography.
