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The Company has performed strongly since its IPO, delivering on its stated objectives. In
return, we have seen continued support from our initial shareholders and significant interest
in the Company from prospective new investors.
The Board believes that supermarket assets are currently one of the most attractive and
secure asset classes for investors seeking both income and the potential for capital growth.
Compared to other asset classes and other sectors within the property market, supermarket
assets currently offer attractive yields.
The Group has access to investment opportunities through the Investment Adviser's longestablished
industry contacts and extensive knowledge of the sector. The Investment
Adviser has achieved a prominent position in the supermarket property sector. This
expertise and network of contacts provide the Investment Adviser with access to off-market
and specialised opportunities.
The Board and the Investment Adviser are confident of delivering strong returns for
shareholders through a stable and growing income stream from the Portfolio, coupled with
the potential for asset management upside. There is a strong pipeline of further assets
which meet the Company's investment policy.
Nick Hewson
Chairman
5 February 2018
Investment Adviser's Report
Atrato Capital Limited is the Investment Adviser to Supermarket Income REIT plc and is
pleased to report on the operations of the Group for the Period.
Overview
In contrast to many asset prices, including some of those in the wider UK real estate sector,
supermarket property yields have widened over the last few years. We believe that this
presents a significant investment opportunity for investors. Supermarket operators appear to
be entering a period of recovery, which should improve their covenant strength as tenants,
at a time when the supermarket property investment market exhibits favourable supply and
demand characteristics.
The Company's investment policy is to invest in stores which deliver the future model of
grocery in the United Kingdom. As grocery retailers are increasingly adopting a strategy of
integrating online and offline shopping, with all the big 4 operators now utilising well located
stores as last-mile fulfilment centres, the Group plans to predominantly acquire stores that
operate both as physical supermarkets and online fulfilment centres via home delivery
and/or click and collect.
The intention is, therefore, to invest in high quality assets, with the following characteristics:
· Future-proofed through operating as online fulfilment centres
· Located in areas with large catchment populations and excellent transportation links
· Strong underlying trading performance
· Attractive property fundamentals with opportunities for active asset management
To date, the Group has concentrated on investing in a portfolio of principally freehold and
long leasehold properties let to Tesco and Sainsbury's which benefit from annual RPI rental
uplifts, in desirable locations with low site cover.