Supermarket Income strikes £403m joint venture with Blue Owl in capital recycling push
Supermarket Income REIT PLC has struck a major deal with US alternative assets group Blue Owl Capital, transferring eight of its UK grocery store assets into a new joint venture valued at £403 million.
The partnership, announced on Thursday, is part of SUPR’s broader strategy to recycle capital, reduce debt, and boost long-term earnings.
The assets sold into the joint venture, which SUPR will continue to co-own 50/50, were transferred at a 3% premium to their December book value.
These omnichannel supermarkets, which support both in-store and online operations, deliver an average net yield of 6.6% and have an average unexpired lease term of 11 years.
In exchange, SUPR will receive around £200 million in cash and a recurring 0.6% management fee for overseeing Blue Owl’s stake in the venture.
It may also collect a performance fee if certain return thresholds are met. The plan is to grow the JV’s portfolio to £1 billion over time, with SUPR offering it first refusal on eligible new deals.
Proceeds will initially go towards reducing SUPR’s own debt, bringing loan-to-value down to 31% before being reinvested in new grocery store assets either directly or through the JV.
The move helps SUPR stay within its 30-40% LTV target while keeping exposure to long-term income-generating assets.
The firm said the deal strengthens its balance sheet and positions it for further growth, while bringing in a strategic US partner keen to expand in the UK grocery sector.
CEO Rob Abraham said: “For our shareholders, the JV is another important milestone in our strategy to recycle capital and grow earnings, and provides a platform for growth with specialist third-party capital.
“This follows a period of significant progress on a number of key strategic initiatives set out in November 2024, including renewing the three shortest leases in the portfolio, material cost reductions culminating in the internalisation of the management of the Company and other capital recycling activity.”
Supermarket Income REIT gets tailwind from buoyant grocery sector
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Supermarket Income strikes £403m joint venture with Blue Owl in capital recycling push
Supermarket Income REIT making all the right moves
Supermarket Income’s Blue Owl deal is sensible, say analysts
I’ve decided to crystalize the profit in MRCH, even though the plan was for it to be a long term holding, to make a capital gain, to be re-invested into the portfolio but a return of 8% in two weeks is too much to lose in the current markets. If the markets reverse then I will buyback but if/until it will be re-invested into a higher yielding Trust.
Cash for re-investment £9,192.00. Current xd cash £592.00
This 7-share ISA portfolio could generate a second income of £16,000 in retirement !
A £20,000 lump sum spread equally across these FTSE 100 and FTSE 250 shares could deliver a significant second income for retirees.
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When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.
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Investors with £20,000 in a Stocks and Shares ISA have many ways to build a second income. Here’s one imagined ISA portfolio to consider that could deliver a large and lasting passive income.
7 high-yield heroes
Dividend share
Sector
Dividend yield
HSBC
Banking
6.5%
Legal & General
Financial services
8.8%
Vodafone
Telecommunications
6.2%
Bluefield Solar Income Fund
Renewable energy
9.3%
M&G
Financial services
10.5%
Pennon Group
Utilities
5.9%
Taylor Wimpey
Construction
8.5%
The portfolio is loaded with high-yield shares that — if broker forecasts prove correct — could provide an above-average second income.
And with diversification across both defensive and cyclical sectors, it can provide stability during economic downturns and the potential for dividend growth over the long term.
Water supplier Pennon Group and Bluefield Solar IncomeFund are vulnerable to higher interest rates that depress asset values and increase borrowing costs. However, the essential nature of their operations means earnings remain broadly stable over time, making them reliable dividend payers.
Likewise, housebuilders such as Taylor Wimpey can suffer when elevated interest rates put pressure on homebuyer affordability. Yet thanks to their strong cash generation, they can still be a reliable source of dividends in rougher patches.
Robust financial foundations also make Legal & General and M&G solid dividend plays (latest financials showed their Solvency II ratios at 232% and 223% respectively). This gives them strength even when pressure on consumer spending dents revenues.
Vodafone could be a riskier pick due to its high debt levels. Indeed, it recently cut shareholder payouts in a bid to rebuild the balance sheet. But I’m confident dividends will rise strongly over the long term, driven by the growing digital economy and the firm’s emerging market exposure.
Brilliant bank
HSBC is a dividend share I’m considering adding to my own portfolio. I feel its focus on fast-growing Asian economies could deliver substantial earnings and dividend growth over the long term.
The FTSE 100 bank isn’t having everything its own way at the moment though. Conditions are tough in China, and particularly in the real estate sector. And they could get more challenging if global trade tariffs keep rising.
But the outlook for its Asian markets remains bright further out as as population numbers and disposable incomes boom. Statista analysts think banks’ net interest income across ASEAN nations will rise around 4% each year through to 2029.
In the meantime, HSBC’s strong balance sheet should (in my opinion) allow it to keep paying large dividends even if profits stutter. Latest financials showed its CET1 capital ratio at a chunky 14.9%.
A £16k second income
If forecasts are accurate, a £20k lump sum spread across these shares in an ISA would generate a £1,600 annual passive income. That’s based on an average 8% dividend yield.
If the dividends remained unchanged and were reinvested, they would — after 30 years — create a portfolio worth £201,254. Thanks to the miracle of compounding, that would then provide a second income of just over £16k a year. That said, making this kind of assumption for seven different stocks is tricky. Some may boom but others may struggle in the decades ahead.
Yet their combined dividend income could feasibly be greater than I’ve suggested as I think these shares could deliver significant capital gains as well as a rising flow of dividends.
Supermarket Inc REIT – Strategic Joint Venture with Blue Owl Capital
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION.
SUPERMARKET INCOME REIT PLC
(the “Company”)
STRATEGIC JOINT VENTURE with blue owl Capital MANAGED FUNDS seeded with £403m of uk supermarkets
Supermarket Income REIT plc (LSE: SUPR), is delighted to announce that it has entered into a strategic joint venture (the “JV”) with funds managed by Blue Owl Capital (“Blue Owl”), a leading US alternative asset manager with over $250 billion of assets under management. This is part of the Company’s ongoing strategy to recycle capital at attractive valuations and grow earnings.
JV transaction
The JV has been seeded with eight high yielding, omnichannel supermarket assets from SUPR’s existing portfolio (the “Seed Portfolio”), which have been transferred into the JV at a 3% premium to book value, as at 31 December 2024. The Seed Portfolio has a combined value of £403 million, an average net initial yield of 6.6%[1] (Cap Rate of 7.1%) and a WAULT of 11 years.
The Company will retain a 50% stake in the JV, and therefore will receive a net cash consideration of c.£200 million in respect of the sale of the assets. It will also receive a management fee of 0.6% per annum of the gross asset value for the ongoing management of Blue Owl’s interest in the JV and potentially a performance fee if the JV meets certain financial targets.
The JV provides a platform for further growth, seeking to acquire additional high yielding supermarket assets, with a view to grow the assets of the JV up to £1 billion over the coming years. The intention of the JV partners is to scale the vehicle, whereby the JV will have a right of first refusal over pipeline assets which meet specific investment criteria.
The Company believes that the principal benefits of the JV for shareholders are as follows:
· Earnings accretion to SUPR through redeployment of capital, ongoing management fees and a potential performance fee
· Leveraging the expertise of the Company’s management team of sector specialists, increasing AUM and, as the JV’s assets grow, SUPR will further benefit from capturing the management fees on an enlarged portfolio
· SUPR will retain an ongoing interest in a longer-term potential pipeline of assets that will remain in the JV structure
· Bringing on board a strategic capital partner with ambitions to grow its exposure in the UK grocery sector
Use of proceeds
The proceeds from the JV will be used to reduce debt in the near term and to invest in other supermarkets either directly for SUPR or indirectly through the JV, based on the investment profile of assets. Following receipt of proceeds from the JV, which is expected to be financed at c.55% LTV shortly after completion, the Company will have an LTV of c.31%. Through redeployment of capital the Company expects to operate at the upper end of its target LTV range of 30-40%, which will include its share of assets and net debt in the JV. The Company will continue to keep all capital allocation options under review.
Robert Abraham, CEO of Supermarket Income REIT, commented:
“The JV with Blue Owl’s managed funds brings a high quality, strategic capital partner that shares our conviction in the value of high yielding UK supermarkets. With the potential to grow to £1bn over the coming years the JV partnership represents Blue Owl’s managed funds’ first major investment in the UK grocery space and is a strong endorsement of the expertise and track record SUPR has established in this market.
For our shareholders, the JV is another important milestone in our strategy to recycle capital and grow earnings, and provides a platform for growth with specialist third party capital. This follows a period of significant progress on a number of key strategic initiatives set out in November 2024, including renewing the three shortest leases in the portfolio, material cost reductions culminating in the internalisation of the management of the Company and other capital recycling activity.”
Marc Zahr, Co-President and Global Head of Real Assets at Blue Owl, said:
“SUPR is the leading UK grocery real estate investor, and we view them as the right counterparty as we execute on our first major transaction in the UK grocery sector. We see an opportunity to generate attractive returns from these assets, which are underpinned by the growing and highly resilient UK grocery sector. We look forward to working with SUPR to grow the JV, as we execute on an attractive pipeline of UK assets.”
An 11% yield? Here’s the dividend forecast for a FTSE 250 powerhouse
Jon Smith outlines one income stock that already has a high yield but explains why the dividend forecast indicates even more potential.
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Jon Smith
FSFL
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Over the past five years, I imagine many income investors will have encountered the Foresight Solar Fund (LSE:FSFL). Incredibly, the dividend yield has never materially fallen below 6%, currently sitting at a very respectable 9.84%. But based on dividend forecasts, things could get even better in the next couple of years.
Company specifics
The UK-listed investment trust allocates money to solar energy and battery storage assets. The portfolio includes 58 solar farms across the UK, Spain, and Australia. It makes money primarily from selling the electricity to businesses via long-term purchase agreements. It can also sell electricity directly into the market at prevailing market rates.
Given its contractual agreements, its cash flow has historically been reliable and strong. As a result, it has paid out quarterly dividends, which it aims to grow year by year. When including the latest dividend, which was declared in February, the business has paid out 2p per share for the past year. As a result, I can calculate the current yield. I used the total figure from the past year of 8p and divided it by the current share price of 81.3p.
The current forecasts indicate that the quarterly dividend will continue to be paid. Starting in June, the next dividend is expected to rise to 2.1p per share and stay at this level for the subsequent four payments. In June 2026, this is expected to rise again to 2.19p per share. Finally, in June 2027 it could rise to 2.27p per share.
So if I take the calendar year for 2027, an income investor could expect to receive two lots of 2.19p and two lots of 2.27p. This would total 8.92p. If I assumed the share price would stay the same, the dividend yield would rise to 10.97%.
Of course, any investor needs to be careful when trying to predict the future. The risk is that the share price either rises or falls over this period. Over the past year the stock is down 1%. But if we see a larger move either way in 2026 or 2027, the yield could be higher or lower than the roughly 11% estimated.
One to consider?
I think it’s reasonable to assume that the dividends can keep growing. The dividend cover is currently at 1, which means the current earnings fully cover the income payments. This is good, and as long as this stays between 1 and 2, I don’t see a risk of income being cut.
One risk is the volatility in electricity prices. Should they fall in the coming year, it would negatively impact the fund’s revenue. Even with this, I think it’s a great stock for income investors to consider buying for their portfolio.
A tracker for the FTSE 100 currently yields around 3.5%. If you want to invest in a tracker, remembering they normally trade around their NAV, you could pair trade with a higher yielder and still receive a blended yield of 7%.
Maybe an option if the current discount in the Watch List start to disappear like snow on a summer’s day.
How just £5k of savings could produce £4k a year in passive income
Building wealth isn’t easy — it takes time and effort. However, this simple investment process could turn £5k into £4k a year of passive income over time.
Posted by
Cliff D’Arcy
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As a value/dividend investor, I have a particular passion for passive income. Who doesn’t like unearned income rolling in with little effort, right?
However, accruing enough assets to generate sizeable passive income can take decades. I began investing in 1986-87; my wife started in 1989. Back then, I had a mane of hair and no financial assets. Nowadays, my head resembles an egg, but I have more wealth.
Building wealth
After nearly four decades of investing, I have many financial lessons to share. Here are five key points:
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
1. Start early — the earlier one starts saving and investing, the better. As the 1964 Rolling Stones song goes, “Time is on my side”. But it’s never too late to start building wealth, even at my age (I’m 57).
2. Understand the risks — risk and return are two sides of the same coin. Typically, the higher the returns, the greater the risks. Therefore, one should spread one’s money around and not put it all in a single basket. Concentration risk can be deadly, trust me.
3. Pay the long game — ideally, investments should be made for five to 10 years, minimum. Over decades, good decisions can reap big rewards, while small slip-ups often disappear into the rear-view mirror.
4. Beware of charges — as a self-directed investor, I make all my own financial decisions. Why pay advisers or fund managers 1% to 2% of my money every year, when most don’t even beat the market?
5. Avoid taxes — there’s no sense in paying taxes if one can legally avoid them. That’s why pensions and other tax-free wrappers are highly popular in the UK.
Turning £5 into £4k a year
Accordingly, how might an investor turn £5,000 in cash into £4,000 a year in passive income? For me, the answer would be long-term investing in shares of quality companies. Let’s say this approach generates a net gain of 8% a year after charges. Over 30 years, this would grow a £5,000 nest egg into £50,313 (which would be tax-free inside a Stocks and Shares ISA). Furthermore, 8% a year from this larger sum would generate £4,025 in passive income in shares with an average dividend yield of 8% a year.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
A FTSE 100 dividend dynamo
As it happens, my wife and I own a few FTSE 100 shares that deliver yearly dividend yields of over 8%.
For example, take Legal & General Group (LSE: LGEN) shares, which we’ve held for years. I admire L&G for its storied history (founded in 1836), its solid business (asset management and insurance), and its capable management team. Today, this group manages £1.1trn of other people’s money, making it one of Europe’s biggest hitters in this field.
At L&G’s current share price of 249.6p, this Footsie stock has a cash yield of 8.6% a year. What’s more, this £14.7bn firm plans to continue lifting this payout and is also buying back its shares. This looks positive to me.
Of course, L&G’s future dividends are not guaranteed, so they could be hit or halted in hard times. Indeed, a full-blown stock-market crash could crash L&G’s earnings, forcing it to take unpleasant steps. Yet this British business maintained its dividend even during Covid-ravaged 2020-21. Also, with billions of spare capital at hand, I hope to pocket plenty more passive income from L&G!
Do you like the idea of dividend income?
The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?
Remember although L&G currently yields 8.5%, the yield you receive is your buying price. So if you bought at a higher price than the current price the yield would be lower and the opposite if you bought at a lower price.
The best and worst assets to own after a bear market
22 April 2025
Trustnet studies where investors might want to put their cash when they believe the negative news is over.
By Matteo Anelli
Bear markets come and go, but losses to one’s finances bite and can even scar. Jerky investors who rush for the exit get chased by the bear – not only do they crystallise their losses but they are also more likely to miss out on the gains when things turn – and they can turn quickly and unexpectedly.
This is why it is unwise to try to time the market, but much better to remain invested (hopefully in the right sectors) and wait for better times.
Below, Trustnet looks back through history to find out which Investment Association sectors had the best returns one and three years after the conclusion of a bear market, defined as those periods when the S&P 500 hit losses of at least 20%.
This is timely as it almost happened again earlier this month and there are fears that a recession could push the US market into bear territory once again before the end of 2025. Having previously looked at the equity investment styles that perform best in down markets, here we look at the assets that perform well at the end of the downward cycle.
The periods that qualified were: Iran’s invasion of Kuwait, with a bear market ending on 11 October 1990, the dot-com bubble, ending 9 October 2002, the Great Financial Crisis, ending 9 March 2009, Covid, ending 23 March 2020, and the supply-chain shock following Russia’s invasion of Ukraine, with its bear market ending on 12 October 2022.
We excluded the sectors without a long enough track record, as well as the IA Unclassified and IA Not Yet Assigned sectors.
Finally, we ran the average returns of the remaining sectors and colour-coded them by quartile. The result is the table below.
Source: Trustnet
While no IA sector emerged as a clear winner in all periods, bonds have been in the bottom quartiles more often than equities. This is likely because of momentum – recovering investors’ confidence drives a rally in equities.
UK gilts were among the worst performers after the dot-com bubble, the financial crisis and Covid, contending the bottom position in the list with the money market. While rushing for the exits and hiding in cash when things go wrong seems like the best option to limit losses, it also means leaving gains on the table in the following one to three years – this happened consistently throughout the five bear-market recovery periods.
Not only gilts performed poorly – the IA Sterling Corporate Bond, Sterling Strategic Bond and Specialist Bond sectors were also below average.
The next-worst category included those investments that are partially in debt strategies – multi-asset funds. Flexible investments remained a middle ground in all periods, solidly delivering average to slightly below-average returns, while the IA Mixed Investment 20-60% Shares and 40-85% Shares sectors have been marginally worse as they have more in bonds.
Commodities have consistently done quite well in the periods highlighted, especially after Covid, when they were among the best-performing asset classes. Infrastructure also held up relatively well, except for after the most recent bear market in 2022.
Moving to equities, global funds has proved a safe-enough bet as markets recovered, with similar results across IA Global, IA Global Equity Income and IA Global Emerging Markets. However, none of the three has ever shot the lights out.
The UK market has consistently kept up with rising momentum. The stand-out area has been UK smaller companies, usually remaining above-average and achieving a fantastic run one year after the Covid slump, although they couldn’t repeat that result in the first year after the Ukraine war started. The IA UK All Companies sector has done increasingly well as time went by, similarly to the domestic Equity Income sector.
The US has been slightly more volatile, with the IA North America reaching the top of the table in 1990 and US small-caps only marginally beating their UK counterparts, but they suffered hits after the dot-com bubble and the Ukraine war, respectively.
Further afield, Asia has held up well, while China had more extreme results – after a stellar run in the 1990s, it has gone from riches to rags more recently, turning into the worst performer one year after the invasion of Ukraine and the subsequent supply shocks.
The data in this study doesn’t show where to invest next, but is proof that market leaders change and not every rally in history was driven by the same asset class. Investors are better off remaining diversified as timing the markets is tough.
UK Equity Income, even if your timing is wrong you can still be right as you earn dividends to re-invest at market beating rates.
