Equity Analysis /
United Kingdom

GB : Supermarket Income REIT - c.5% DPS yield with inflation protection

    Chris Spearing
    Chris Spearing

    Analyst - Real Estate

    Contributors
    Hugh Carrow
    Tom Musson
    CGS-CIMB
    26 March 2022
    Published by

    Supermarket Income REIT (SUPR) H1 results were broadly in line. We lower FY22E EPS c.5%, but leave FY22E NTA per share unchanged at 115p. Near-term risk to rent-to-sales ratio if the consumer switches to cheaper grocers, but grocery volumes remain well ahead of pre-pandemic levels. The government’s solar agenda may also carry positives. We still think the asset base is undervalued. Our fair value yield of 4.0% offers >25% NTA upside. A c.5% DPS yield and inflation-protected growth (c.4% cap) is attractive. We maintain our 140p TP, based on blend of EVA and SoTP.