Supermarket Income REIT - Revision history

95.149.241.133 at 19:14, 20 August 2022

2022-08-20T19:14:24Z

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	[[Category:Thesis]]		[[Category:Thesis]]
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			__INDEX__

>Louis at 16:29, 22 July 2022

2022-07-22T16:29:23Z

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	To learn more about Supermarket Income REIT, click [mailto:ir@atratocapital.com here].		To learn more about Supermarket Income REIT, click [mailto:ir@atratocapital.com here].
			<references />
			[[Category:Thesis]]
			[[Category:Equities]]

>Paul: /* Strong near-term returns with a positive outlook */

2022-03-21T14:42:13Z

Strong near-term returns with a positive outlook

← Older revision		Revision as of 15:42, 21 March 2022
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	Given the non-discretionary nature of most grocery sales, supermarkets have historically benefited from an inflationary environment, with their ability to pass on supply chain cost pressures through price increases. In February 2022, the 12-month rate of RPI was 7.1%, the highest rate of increase since March 1991, while CPI increased by 5.5%, the highest rate of increase since March 1992. The Bank of England continues to expect a moderation in inflation as commodity prices stabilise, supply shortages ease and global demand rebalances, but this is far from assured, and has surely been deferred by the continued rise in oil and commodity prices amid international tensions and war in Ukraine.		Given the non-discretionary nature of most grocery sales, supermarkets have historically benefited from an inflationary environment, with their ability to pass on supply chain cost pressures through price increases. In February 2022, the 12-month rate of RPI was 7.1%, the highest rate of increase since March 1991, while CPI increased by 5.5%, the highest rate of increase since March 1992. The Bank of England continues to expect a moderation in inflation as commodity prices stabilise, supply shortages ease and global demand rebalances, but this is far from assured, and has surely been deferred by the continued rise in oil and commodity prices amid international tensions and war in Ukraine.

	SUPR benefits in two ways from this inflationary tailwind. The first is through the inflation-linked rental uplifts that apply to 85% (76% RPI and 9% CPI) of passing rent, although this is capped at an average c 4%. The second is from the beneficial impact that may be expected on operators including the linkage between store turnover and the determination of market level rents. SUPR estimates that its average rent to turnover ratio across the portfolio is c 4%,2 which it believes indicates that rents remain highly affordable.		SUPR benefits in two ways from this inflationary tailwind. The first is through the inflation-linked rental uplifts that apply to 85% (76% RPI and 9% CPI) of passing rent, although this is capped at an average c 4%. The second is from the beneficial impact that may be expected on operators including the linkage between store turnover and the determination of market level rents. SUPR estimates that its average rent to turnover ratio across the portfolio is c 4%<ref>Based on Atrato Capital estimates of store trading.</ref>, which it believes indicates that rents remain highly affordable.

	'''Premium Segment listing'''		'''Premium Segment listing'''

>Paul: /* Sensitivities */

2022-03-21T14:40:57Z

Sensitivities

← Older revision		Revision as of 15:40, 21 March 2022
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	* Inflation-linked rent increases provide good income protection against inflation, provided inflation does not rise too far. SUPR’s inflation-linked rents, 85% of the total, are capped at an average level of c 4%. Rental income will lag higher rates of inflation. Were higher rates of inflation to have a negative impact on economic growth, the relative security of the tenant base, and its ability to pass on inflationary supply chain pressures, is in contrast to much of the mainstream commercial property market.		* Inflation-linked rent increases provide good income protection against inflation, provided inflation does not rise too far. SUPR’s inflation-linked rents, 85% of the total, are capped at an average level of c 4%. Rental income will lag higher rates of inflation. Were higher rates of inflation to have a negative impact on economic growth, the relative security of the tenant base, and its ability to pass on inflationary supply chain pressures, is in contrast to much of the mainstream commercial property market.
	* As noted above, debt facilities currently amount to c £794m with an average term to maturity of around four years. Increasing interest rates negatively affect borrowing costs in respect of the fully floating rate debt, but index-linked rates are currently increasing at a faster rate. A material rise in long-term interest rates, also at historically low levels, could negatively affect valuations across the commercial property sector.		* As noted above, debt facilities currently amount to c £794m with an average term to maturity of around four years. Increasing interest rates negatively affect borrowing costs in respect of the fully floating rate debt, but index-linked rates are currently increasing at a faster rate. A material rise in long-term interest rates, also at historically low levels, could negatively affect valuations across the commercial property sector.

			==References==

			==Actions==

			To invest in Supermarket Income REIT, click [https://www.hl.co.uk/shares/shares-search-results/s/supermarket-income-reit-plc-ord-gbp0.01 here].

			To learn more about Supermarket Income REIT, click [mailto:ir@atratocapital.com here].

>Paul: /* Strong near-term returns with a positive outlook */

2022-03-21T14:36:40Z

Strong near-term returns with a positive outlook

← Older revision		Revision as of 15:36, 21 March 2022
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	'''The shift to working from home and increased digitalisation'''		'''The shift to working from home and increased digitalisation'''

	Increased working from home appears likely to remain a permanent feature even as the economy fully re-opens and represents a step-change in UK grocery shopping habits. During the pandemic, supermarkets demonstrated their critical role in the UK economy as core food infrastructure and although the exceptional growth experienced during the lockdowns has normalised, grocery sales remain 10% higher than pre-pandemic levels, in part due to the shift towards working from home resulting in a more permanent increase in household spend on groceries. While in-store shopping remains the dominant channel, representing 87% of all grocery sales,1 the 13% share of online sales is almost twice the pre-pandemic level. Omnichannel stores have captured an outsized share of the growth with 80% of all UK online orders fulfilled from a store. Omnichannel stores with in-store picking for online orders are capital light, flexible and quickly scalable, and have now become a profitable method of fulfilling online orders. The online channel shift has been dominated by the major supermarket operators (68% market share) leveraging their store networks to support last mile delivery.		Increased working from home appears likely to remain a permanent feature even as the economy fully re-opens and represents a step-change in UK grocery shopping habits. During the pandemic, supermarkets demonstrated their critical role in the UK economy as core food infrastructure and although the exceptional growth experienced during the lockdowns has normalised, grocery sales remain 10% higher than pre-pandemic levels, in part due to the shift towards working from home resulting in a more permanent increase in household spend on groceries. While in-store shopping remains the dominant channel, representing 87% of all grocery sales<ref>Kantar data.</ref>, the 13% share of online sales is almost twice the pre-pandemic level. Omnichannel stores have captured an outsized share of the growth with 80% of all UK online orders fulfilled from a store. Omnichannel stores with in-store picking for online orders are capital light, flexible and quickly scalable, and have now become a profitable method of fulfilling online orders. The online channel shift has been dominated by the major supermarket operators (68% market share) leveraging their store networks to support last mile delivery.

	'''Inflation benefits'''		'''Inflation benefits'''

>Paul: Paul moved page Supermarket income REIT to Supermarket Income REIT

2022-03-21T14:27:57Z

Paul moved page Supermarket income REIT to Supermarket Income REIT

← Older revision		Revision as of 15:27, 21 March 2022
(No difference)

>Paul: Created page with "Financial and strategic progress ==Summary== Supermarket income REIT (SUPR) showed a strong H122 financial performance, driven by accretive portfolio growth alongside index-linked rental growth. The prospects for this to continue are well supported by structural trends in the market. SUPR continues to identify accretive acquisition opportunities while its recent admission to the Premium Segment of the LSE and Investment Grade credit rating provide additional flexibilit..."

2022-03-21T14:25:03Z

Created page with "Financial and strategic progress ==Summary== Supermarket income REIT (SUPR) showed a strong H122 financial performance, driven by accretive portfolio growth alongside index-linked rental growth. The prospects for this to continue are well supported by structural trends in the market. SUPR continues to identify accretive acquisition opportunities while its recent admission to the Premium Segment of the LSE and Investment Grade credit rating provide additional flexibilit..."

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