UK's Supermarket Income REIT EPRA earnings per share fall on refinancing costs

Overview

• UK grocery real estate investor's EPRA earnings per share fell 4.1% yr/yr

• IFRS earnings per share rose 39.4% yr/yr

• Dividend per share increased 1% yr/yr; company completed £100 mln equity raise post year-end

Outlook

• Company targeting minimum dividend growth of 2% per annum from FY27

• Board recommends target dividend of 6.30p for year ending 30 June 2027, up 2%

• Company sees pipeline of over £500 mln in high-quality grocery assets for future growth

Result Drivers

• PORTFOLIO EXPANSION - Co acquired £454 mln of properties, diversifying its portfolio and scaling its JV with Blue Owl Capital

• EARNINGS IMPACT FROM JV AND INTEREST COSTS - Reduction in earnings primarily reflects timing of redeployment of JV proceeds and one-off increase in interest costs from refinancing

• OPERATIONAL EFFICIENCY - EPRA cost ratio fell to 9.2%, among the lowest in the sector, due to internalisation and cost reductions

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 3 "strong buy" or "buy", 4 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the commercial reits peer group is "buy"

• Wall Street's median 12-month price target for Supermarket Income REIT PLC is GBp93.00, about 12.8% above its September 15 closing price of GBp82.45

• The stock recently traded at 13 times the next 12-month earnings vs. a P/E of 13 three months ago

Reuters Recommended Reads

• Sept 15 - UK grocery inflation edges higher over last month, says Worldpanel

• Sept 15 - UK's Wickes sees sales pick up as customers chase value

• Sept 15 - UK food price inflation could hit nearly 7% in 2027, says industry researcher

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