After a year of reshaping itself, Supermarket Income REIT PLC (LSE:SUPR, OTC:SUPIF) looks well stocked for the next phase of growth.
Peel Hunt keeps its 'add' rating and 85p target price, arguing that the real estate investment trust remains attractively valued on a 10% discount to net tangible assets and offers a reliable 7.8% dividend yield.
For the year to June, total accounting return was 7.2%, with net tangible assets broadly flat. Earnings per share dipped 2%, but the dividend rose 1%.
More importantly, the period saw the business take several strategic steps: it internalised management, completed a secondary listing in South Africa, launched a joint venture with Blue Owl Capital, and issued its first bond.
Together, these moves give the company more flexibility to grow and diversify funding sources.
Peel sees a “current and compelling pipeline of opportunities” that could lift earnings once the joint venture capital is deployed. Near-term, the analysts trim their 2026 earnings forecast by 10% to reflect cash drag from uninvested proceeds.
But that impact should reverse by 2027, when the broker expects total returns to rise to 10% and stay there through 2028.
With a pro-forma loan-to-value ratio of 34%, Supermarket Income REIT has room to invest without stretching its balance sheet.
Supported by long, inflation-linked leases to supermarket operators, Peel Hunt concludes the trust remains one of the most defensive income plays in the property sector, and one still with growth on the shelves.