Supermarket Income REIT plc (LSE:SUPR) reported interim results for the six months to 31 December 2025 broadly in line with expectations, with annualised passing rent increasing 11% and the portfolio value rising 27% to £2.06bn. EPRA earnings per share declined 10% during the period, while dividend cover fell to 88%.
The company said the reduction in earnings mainly reflected temporary factors, including cash drag from its expanded joint venture and one-off refinancing costs. Management expects these pressures to ease following the full redeployment of joint venture capital into £398m of acquisitions aimed at boosting future earnings.
With the joint venture proceeds now fully invested, the board has updated its dividend outlook and is targeting a sustainable minimum dividend increase of 2% per year from the 2027 financial year onward. The dividend strategy will continue to be supported by long-term, inflation-linked rental income from grocery tenants. The group also highlighted a significant improvement in efficiency, with its EPRA cost ratio falling to 9.2%, among the lowest levels in the sector after bringing management fully in-house.
Portfolio performance remained stable, with like-for-like valuations rising 1.3% and the portfolio delivering a net initial yield of 6.0%. Loan-to-value increased to 45% as the company used leverage, including a debut bond issuance, to expand its grocery property holdings.
Management said the long-term outlook for grocery real estate remains favourable, supported by rising supermarket sales and the essential role of omnichannel stores that serve both in-store shoppers and online fulfilment operations. The company aims to significantly expand its portfolio over time.
Recent transactions have broadened the trust’s tenant base and geographic exposure. The group acquired 20 supermarkets leased to Carrefour directly and, through its joint venture, added 10 stores leased to Asda. Management described the properties as well-established locations with strong trading histories.
The company is also exploring further diversification opportunities, including grocery-anchored retail parks, European supermarket assets and potentially grocery distribution facilities. It said its acquisition pipeline currently exceeds £500m.
On the sustainability front, Supermarket Income REIT received its first EPRA Sustainability Best Practices Gold Award and achieved a seventh consecutive EPRA Gold Award for financial reporting. The group has also joined the United Nations Global Compact, reinforcing its commitment to responsible business standards.
Overall, the company’s outlook remains supported by stable financial performance, a relatively attractive dividend yield and positive market momentum. Strategic acquisitions and continued confidence from management further strengthen its position as a leading specialist investor in grocery real estate.
More about Supermarket Income REIT
Supermarket Income REIT plc is a FTSE 250-listed property investment company focused on high-quality omnichannel supermarkets and grocery-related real estate. As of 31 December 2025, its portfolio was valued at approximately £2.1bn and leased to leading UK and European grocery operators under long-term, inflation-linked agreements. The company aims to deliver progressive dividends alongside long-term capital growth by investing in assets that support both physical and online grocery retail.
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