Supermarket Income REIT plc

Net rental income was GBP 57 million, down 2% year over year. EPRA EPS was 2.7p versus 3p in the prior period. EPRA cost ratio improved to 9.2%, down 440 basis points, and the company delivered over GBP 2 million of cost savings in the first half. Dividends paid were 3.1p, up 1%. The portfolio increased to GBP 2 billion, up 20% since June '25, and EPRA NTA was 87.5p, up from 87.1p. The portfolio produced a GBP 7 million revaluation uplift, or 1.3% on a like-for-like basis, and total accounting return was 4% for the half. Guidance was raised to a minimum dividend uplift of 2% per annum from FY '27 onwards. Management also said the JV proceeds have now been fully redeployed, expects the financial benefit from that redeployment to come through from FY '27 onwards, and remains on track to reduce the cost ratio to below 9% for FY '27.

Rob Abraham framed the period as a transformation year focused on building a platform for growth rather than maximizing near-term earnings. He highlighted the internalization of management, the JV with Blue Owl, the expanded team, and a growing pipeline of over GBP 500 million as evidence the business is positioned to scale. His tone was confident and opportunistic, emphasizing sector specialization, disciplined capital allocation, and ambitions to double the portfolio while keeping grocery income, long leases, and investment-grade quality intact.

Michael Perkins focused on the financial impact of the strategic moves and cited the key numbers behind the quarter: GBP 57 million of net rental income, 2.7p EPRA EPS, 9.2% EPRA cost ratio, and 4% total accounting return. He said the H1 earnings dip was largely due to the timing gap between receiving JV proceeds in May '25 and redeploying them, but that management fee income and GBP 2 million of cost savings fully offset higher debt costs. On capital and funding, he noted GBP 398 million deployed at a 6.5% net initial yield, a 99.5% gross-to-net rent ratio, 92% of drawn debt fixed or hedged, a 4.8% weighted average cost of debt, leverage at 43%, and BBB+ reaffirmed by Fitch.

Analysts pressed management on the proposed grocery distribution allocation, whether the business would expand into non-retail assets, and how quickly dividend growth could move beyond 2% toward inflation-linked increases. Management said the mix will be opportunity-led and could include stores or distribution if assets are mission-critical, but the near-term most obvious move would be more with Tesco or Sainsbury's; they also said any overseas expansion would be measured. On dividends, they said the new 2% minimum reflects the work done to redeploy JV capital and cut costs, while the longer-term ambition remains to pass through inflation-linked rent growth to shareholders. Questions also focused on Blue Owl/JV appetite, leverage, valuations, and achievable returns; management said Blue Owl remains willing to do more, leverage should trend toward the 7x-8x net debt-to-EBITDA range, valuers are conservative, and a sustainable total accounting return of 8% to 10% is achievable in a stable yield environment.