UK investor Supermarket Income REIT has purchased a Morrison's supermarket at the former Hillsborough Barracks in Sheffield for £52.1 mln (€58 mln), reflecting a net initial yield of 4.9%.
In addition to a large regional-size store, the 113,000 ft2 asset includes an online distribution centre for Morrison’s deliveries and click-and-collect services, plus an online distribution facility for Amazon Fresh. Morrisons has a 21-years-to-expiry RPI-linked lease. The next rent review is scheduled for October 2019.
According to analyst Goodbody, the deal aligns with Supermarket Income's policy to only acquire online-channel stores with online infrastructure. Goodbody said that it expected significant yield compression on the asset over the next 12 months, given strong investor demand.
This is the final acquisition for Supermarket Income using the proceeds of its over-subscribed £65 mln placing, and brings the portfolio to six assets and a total value of £310 mln. The property represents the first Morrisons asset in the portfolio, which now includes the UK's 'big four', alongside Asda, Tesco and Sainsburys.
Separately, the company has also announced that it has arranged a new five-year, interest-only loan facility with Bayerische Landesbank. The £52.1 mln facility has an opening margin of 125 basis points above three-month LIBOR and is secured against the new Morrisons’ supermarket in Sheffield and the Sainsbury’s supermarket in Ashford.