October 6 2026 14:00
Supermarket Income Reit CEO, Rob Abraham
Last month, JSE-listed Supermarket Income Reit reported financial results for the year to end-June 2026, wherein the company’s portfolio grew healthily even if income fell.
The multiple exchange-listed comapny(LSE: SUPR, JSE: SRI) declared a 6.2p dividend for the year to 30 June 2026, up from 6.1p, after a year of heavy dealmaking pushed its portfolio to £2.01bn. The UK-based owner of Tesco, Sainsbury’s, Asda and Carrefour stores bought £454m of assets during the year and has now set a target of growing its dividend by at least 2% a year for its 2027 financial year.
IFRS earnings per share jumped 39% to 6.9p, flattered by one-off items, while EPRA earnings per share – the cleaner measure of recurring income – fell 4.1% to 5.7p. That left the dividend 93% covered by earnings, down from 98% a year earlier.
Earnings dip as JV proceeds are recycled
Management put the drop in EPRA earnings down to timing: cash received when it sold assets into its joint venture with Blue Owl Capital took time to redeploy, and refinancing its debt early added a one-off interest cost. Net rental income fell 11% to £100.5m from £113.2m.
Pre-tax profit rose 39% to £84.5m. That jump was helped by a much smaller loss on interest-rate derivatives and a near tenfold rise in the share of JV income to £14.6m. Last year’s profit also included a £20.8m lease termination fee that did not recur.
| Measure | FY26 (to 30 Jun 2026) | FY25 (to 30 Jun 2025) | Change |
|---|---|---|---|
| EPRA EPS | 5.7p | 6.0p | -4.1% |
| IFRS EPS | 6.9p | 4.9p | +39.4% |
| Dividend per share | 6.2p | 6.1p | +1.0% |
| Dividend cover | 93% | 98% | -5.0 pts |
| EPRA cost ratio | 9.2% | 13.0% | -3.8 pts |
| EPRA NTA per share | 87.5p | 87.1p | +0.4% |
| IFRS NAV per share (diluted) | 89.2p | 88.4p | +0.9% |
| Total accounting return | 7.5% | 7.2% | +0.3 pts |
The standout improvement was with respect to costs. The EPRA cost ratio fell to 9.2% from 13.0%, which the group says is among the lowest in the sector, following the internalisation of management in 2025. The company expected the ratio to dip below 9% in the near term.
Portfolio grows 23.7% on £454m of deals
The portfolio, including the company’s share of the JV, rose to £2.01bn from £1.63bn. Like-for-like valuations gained 2.5%, well ahead of the 0.1% capital growth in the MSCI All Property index, and the net initial yield edged up to 6.0%. Occupancy and rent collection both stayed at 100%.
The year’s acquisitions also broadened the mix:
- 10 Asda omnichannel supermarkets, bought through the Blue Owl JV, which has grown to £855m from £403m at its launch
- 20 more Carrefour supermarkets in France, extending a move into the French market
- 10 Sainsbury’s convenience foodstores, a first step into smaller formats
- nine foodstores bought on the secondary market
After year-end, the group renewed leases on two large-format stores on better terms and longer durations.
Gearing climbs to 43.9%
The acquisition spree has lifted leverage sharply. Loan-to-value rose to 43.9% from 31.1% a year earlier, and net debt to EBITDA stood at 7.8 times – figures investors will watch as the group keeps buying.
The Reit issued a debut £250m unsecured bond in July 2025, a six-year note with a fixed 5.125% coupon. In July 2026 it refinanced £445m of loan facilities, lowering borrowing costs and extending its debt maturity profile. Fitch reaffirmed its BBB+ investment-grade rating.
Also in July 2026, the group raised £100m of new equity. Together with debt, that has funded £222 of grocery acquisitions since year-end, at an average net initial yield of 6.6%. These included five food stores, the company’s first grocery distribution centre, which was let to Sainsbury’s, and an exchanged deal for three supermarkets worth £118m.
What it means for JSE investors
The market reaction was muted. On results day (16 September 2026) the shares rose 1.0% to 83.29p in London but were flat at R17.89 on the JSE.
At that London price, the shares traded about 5% below EPRA NTA of 87.5p and offered a trailing yield of roughly 7.4% on the 6.2p dividend. For South African holders, SUPR offers rand-hedge exposure to defensive, inflation-linked UK grocery rents, with returns also shaped by the pound-rand exchange rate.
The questions for local investors were whether the post-year-end deals restore full dividend cover, and how comfortably the group can carry gearing in the mid-40s while it chases its growth ambitions
CEO Rob Abraham said the past 18 months had turned Supermarket Income Reit into a leaner, scalable platform aligned with shareholders. He set out an ambition to grow the portfolio to £4bn and beyond, backed by an actionable pipeline of more than £500m of grocery assets. Many 1st world fund managers want a Reit to own R100bn in assets before they invest in the group.
Supermarket Income Reit said there were supportive market conditions. UK grocery spend reached £256bn in 2025, and grocery sales grew 3.2% in the year to June 2026 against food inflation of 1.7%, suggesting real volume growth. Online now makes up 12.6% of the grocery market, a trend thr company said favours its omnichannel stores, which double as fulfilment hubs.
With the 2% minimum dividend growth target kicking in from the 2027 financial year, Supermarket Income Reit is betting that cost savings and newly acquired rent will lift earnings back above the dividend payout.
247@propertyflash.co.za
