Editing Supermarket Income REIT (section)

== Valuation ==

Based on the company’s FY22 target aggregate DPS of 5.94p, the prospective yield is 4.9% (124p). The share price premium to end-FY21 EPRA NTA per share is 7%.

In Exhibit 13 we show a comparison of SUPR with a group of other property companies that focus on income returns derived from long leases. Compared with the group average, SUPR has a similar yield and slightly higher P/NAV ratio. Its predominantly RPI-linked rent growth provides investors with considerable visibility of income with protection against inflation, while the strength of its tenant covenant has been successfully tested and even enhanced during the pandemic and should prove resilient in the inflationary conditions that have followed. As well as supporting the SUPR share rating, this suggests a favourable outlook for further supermarket property yield tightening and NAV growth above our forecasts.