Supermarket Income REIT (SUPR) shares have re-rated in response to the strategic “transformation” made since the start of last year, the company said in annual results today. Shares in the £1.1bn real estate investment trust rose 1.8% to 84p, narrowing the gap to net tangible assets (NTA) of 87.5p per share to 4%. That compares to a 15% discount in March last year when the shares stood at 75p compared to NTA of 88p. Internalising fund management had cut the cost ratio from 13% to 9.2% in the year to 30 June, releasing more money for dividends that are set to grow by at least 2% a year from 2027, helped by a portfolio enlarged by the expanded joint venture with Blue Owl and a £100m equity raise this summer. For the latest year dividends rose 1% from 6.1p to 6.2p per share, with cover for the pay-out falling to 93% from 98% as refinancing costs temporarily knocked earnings per share by 4.1% to 5.7p from 6p last year. The shares yield 7.4%.

Matthew Read said: “Supermarket Income REIT has undergone considerable change over the past 18 months and these results demonstrate the scale of its ambitions. The portfolio has grown to £2bn, the Blue Owl joint venture has expanded rapidly and costs continue to fall, with the EPRA cost ratio down to 9.2%. With the proceeds of July’s equity raise already deployed, SUPR needs to show that it can convert this growth into higher earnings and deliver on its commitment to increase the dividend by at least 2% a year. The grocery property market remains supportive and SUPR appears to have plenty of opportunities to grow within it.”