LONDON: Supermarket Income REIT (LSE: SUPR) announced a strategic joint venture with Blue Owl Capital, a U.S.-based alternative asset manager with over $250 billion in assets under management. The partnership aligns with SUPR’s strategy to recycle capital at favorable valuations and expand earnings.
The joint venture begins with a seed portfolio of eight high-yielding supermarket properties from SUPR’s existing assets. Valued at £403 million, the portfolio was sold to the venture at a 3% premium to book value as of Dec. 31, 2024. With an average yield of 6.6% and an 11-year weighted average unexpired lease term (WAULT), the portfolio marks a strong foundation for future growth. SUPR retains a 50% stake, receiving approximately £200 million in net cash from the transaction alongside annual management fees and potential performance incentives.
CEO Robert Abraham hailed the partnership as a “milestone in the company’s capital recycling and earnings growth strategy,” emphasizing the joint venture’s potential to scale its assets to £1 billion over time. Blue Owl, marking its first major investment in the U.K. grocery sector, expressed confidence in the resilience and growth of the market.
The proceeds will help SUPR reduce debt and pursue new supermarket investments, either directly or via the joint venture. SUPR anticipates operating within the upper range of its target loan-to-value (LTV) ratio of 30-40%.
The venture will have first refusal rights on future acquisitions that meet defined criteria, aiming to further leverage SUPR’s expertise and grow the asset base. With ambitions to expand within the resilient U.K. grocery sector, both parties see opportunities for attractive returns and long-term growth.