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
Proactive Investors
Snapshot
- 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
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