22 November 2024
SUPERMARKET INCOME REIT
PLC
(the
"Company")
notice of ANNUAL
GENERAL MEETING AND SHAREHOLDER RESOLUTIONS
The Board of Directors of
Supermarket Income REIT plc (LSE: SUPR), announces that the Annual
General Meeting ("AGM") of the Company will be held on Monday, 16
December 2024 at 12.00 p.m. at the offices of Macfarlanes LLP, 20
Cursitor Street, London EC4A 1LT. The Notice of AGM has been sent
to shareholders and is also available on the Company's
website.
In addition to the usual AGM
business, the Company will be seeking shareholder approval to: i)
amend its investment objective and policy, and
ii) enter into new service agreements with
entities within the Atrato Group. Further details of both of these
matters are outlined below.
Proposed amendments to the Company's Investment
Policy
In Europe, we see an attractive opportunity to
broaden our investible universe and enhance the diversity of our
asset and tenant base, particularly following our
inaugural transaction in Europe earlier this year with
Carrefour. To that end, the
Board is proposing changes to the Company's Investment Policy to
allow for greater investment in European markets, whilst
ensuring the UK remains our core focus with
at least 60% of rental income derived from
properties in the UK let to supermarket operators.
The key proposed changes
include:
·
to expand the geographical area of investment in
relation to at least 80% of GAV to cover supermarket operators in
both the UK and Europe;
·
to broaden the investment restriction which
currently requires the Company to derive at least 60% of its rental
income from a portfolio of properties let to the largest four UK
supermarket operators, to also include properties located in the UK
let to other supermarket operators; and
·
to amend the investment restriction which applies
within a geographical area such that:
o there will be no more than two assets within a single
geographical area; and
o no
individual grocer tenant will operate more than one of the
Company's grocery real estate assets in any single geographical
area where the value of the two assets combined at the point of
acquisition would exceed 10% of the portfolio gross asset
value.
If the proposed changes are
approved, the Board and Investment Adviser intend to continue
focusing primarily on investing in UK assets whilst taking an
incremental approach to gradually increase the Company's exposure
to European assets, initially in a limited number of countries, and
primarily France in the near term. Investments will continue to
align with the Company's strict investment criteria, targeting
high-quality operators and strong trading omnichannel stores that
meet the Company's rigorous standards. The proposed changes aim to
enhance the Company's ability to scale and diversify the portfolio
whilst maintaining tenant covenant strength. Additionally, the
ability to access lower Euro-denominated financing costs will
further enhance earnings accretion.
The Company has received written
approval from the Financial Conduct Authority to make the
amendments to the Company's Investment Policy described above and
in accordance with the UK Listing Rules, shareholder approval is
being sought for those amendments at the AGM. If approved, the
changes to the Investment Policy will take immediate effect
following the AGM.
Further details on the changes,
along with the full revised Investment Policy, are provided in the
Notice of AGM, available in the Investor Centre of the Company's
website at www.supermarketincomereit.com.
Entry into New Service Agreements
The Company is also voluntarily
seeking shareholder approval to enter into new service agreements
with entities within the Atrato Group.
As announced on 5 November
2024, the Company's aims to have one of the lowest
EPRA cost ratios in the UK REIT sector and accordingly, the
Directors have worked closely with the Investment Adviser to
identify ways to deliver both material cost savings and even closer
alignment with the interests of the Company and its
shareholders.
The new investment advisory
agreement will see the basis of the calculation of the management
fee change from net asset value ("NAV") to market capitalisation.
While the proposed change will not be implemented until the start
of the Company's next financial year, 1 July 2025, based on the
current share price of 68.5p on 15 November 2024, being the latest
practicable date prior to publication of the Notice of AGM, the
Company would save c.£1.9 million per annum compared to the
management fee calculated based on the Company's last published
NAV.
The AIFM, company secretarial and
payment services have previously been fulfilled by external service
providers. The Company will seek to transition these services to
the Atrato Group at a reduced fixed fee level that will result in
further savings of c.£0.3 million per annum for the
Company.
The Company expects the aggregate
annual savings to contribute materially to earnings per share and
therefore dividend cover (based both on its current market
capitalisation relative to NAV, as well as in absolute terms for
the non-investment advisory services). The Directors consider that
the New Service Agreements together represent a fair outcome of
negotiations, in particular in the context of the material
reduction in fees from July 2025.
Each of the Investment Adviser, the
New AIFM and Hafren are related parties of the Company and entry
into the New Service Agreements each constitutes a relevant related
party transaction under UKLR 11.5.4R. While the Company is not
required to obtain shareholder approval in relation to the entry
into the New Service Agreements, it is giving shareholders the
opportunity to approve the entry into the New Service Agreements as
a matter of good corporate governance.
The Board considers entry into the
New Service Agreements to be fair and reasonable as far as the
shareholders of the Company are concerned, having been so advised
by the Company's sponsor, Stifel Nicolaus Europe
Limited.
The details of the New Service
Agreements have been set out in the appendix of this announcement
and further details can be found in the Notice of AGM.
Capitalised terms used in this
announcement shall have the meanings ascribed to them in the Notice
of AGM, unless the context otherwise requires.
General Meeting
The AGM of the Company will be held
on Monday, 16 December 2024 at 12.00 p.m. at the offices of
Macfarlanes LLP, 20 Cursitor Street, London EC4A 1LT.
As your participation is important
to us, we would encourage you to vote ahead of the AGM by
appointing your proxy in the manner described in the notice of AGM,
no later than 12.00 p.m. on Thursday, 12 December 2024.
The Notice of AGM, Annual Report and
Financial Statements are available to view in the Investor Centre
of the Company's website at http://www.supermarketincomereit.com
and, in accordance with UKLR 6.4.1, copies of the documents have
been submitted to the Financial Conduct Authority and will shortly
be available for inspection from the National Storage Mechanism
at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
|
FOR FURTHER
INFORMATION
|
|
|
Atrato Capital
Limited
|
+44 (0)20 3790
8087
|
|
Rob Abraham / Mike Perkins / Chris
McMahon
|
ir@atratocapital.com
|
|
Stifel
Nicolaus Europe
Limited
|
+44 (0)20 7710
7600
|
|
Mark Young / Rajpal Padam / Madison
Kominski
|
|
|
|
|
|
Goldman Sachs
International
Tom Hartley / Hannah Mackey
|
+44 (0)20 7774 1000
|
|
|
|
|
FTI
Consulting
|
+44 (0)20 3727
1000
|
|
Dido Laurimore / Eve Kirmatzis / Andrew
Davis
|
SupermarketIncomeREIT@fticonsulting.com
|
NOTES TO
EDITORS:
Supermarket Income REIT plc (LSE: SUPR) is
a real estate investment trust dedicated to investing in grocery
properties which are an essential part of the feed the nation
infrastructure. The Company focuses on grocery stores which are
omnichannel, fulfilling online and in-person sales. The Company's
supermarkets are let to leading supermarket operators in the UK and
Europe, diversified by both tenant and geography.
The Company's assets earn long-dated, secure,
inflation-linked, growing income. The Company targets a progressive
dividend and the potential for capital appreciation over the longer
term.
The Company is listed on the Closed-ended
investment funds category of the FCA's Official List and its
Ordinary Shares are traded on the LSE's Main
Market.
Atrato Capital Limited is the Company's
Investment Adviser.
Further information is available on the
Company's website www.supermarketincomereit.com
LEI: 2138007FOINJKAM7L537
Stifel Nicolaus Europe Limited, which is authorised and
regulated in the United Kingdom by the Financial Conduct Authority,
is acting exclusively for Supermarket Income REIT plc and no one
else in connection with this announcement and will not be
responsible to anyone other than the Company for providing the
protections afforded to clients of Stifel Nicolaus Europe Limited
nor for providing advice in connection with the matters referred to
in this announcement.
Goldman Sachs International, which is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting exclusively for Supermarket Income REIT
plc and no one else in connection with this announcement and will
not be responsible to anyone other than the Company for providing
the protections afforded to clients of Goldman Sachs International
nor for providing advice in connection with the matters referred to
in this announcement.
Appendix
Details of New Service
Agreements
Subject to and conditional upon the
approval of Shareholders at the AGM:
(i)
the Company has agreed to enter into a new investment advisory and
accounting and administration services agreement with Atrato
Capital Limited (the "Investment
Adviser") and Atrato Partners Limited (the
"New AIFM") (the
"New IAA");
(ii)
the Company has agreed to enter into a new AIFM Agreement with the
New AIFM (the "New AIFM
Agreement"); and
(iii)
the Company has agreed to enter into a new company secretarial
services agreement with Hafren Limited ("Hafren"), an entity within the Atrato
Group (the "New Company Secretarial Services Agreement"),
(together, the "New Service Agreements"). The New
Service Agreements will each become effective by 1 July 2025. The
Company's existing investment advisory agreement, AIFM agreement
and company secretarial services agreement will each be terminated
in connection with entry into the New Service
Agreements.
The Directors have conducted
extensive negotiations with the Investment Adviser, the New AIFM
and Hafren with the benefit of independent advice on the terms of
the New Service Agreements.
(a) The New
IAA
The terms of the New IAA will be on materially the
same terms as under the existing investment advisory agreement (the
"Existing IAA"), except for
the following:
(i)
Basis of fee calculation
The basis of the management fee calculation will be
changed from net asset value to market capitalisation, effective
from 1 July 2025. The current fee thresholds and rates applied to
the net asset value-based calculations will be retained as shown
below:
|
Threshold
|
Fee rate on revised market
capitalisation basis
|
|
Up to £500 million
|
0.95%
|
|
Between £500 million to £1
billion
|
0.75%
|
|
between £1 billion to £1.5 billion
|
0.65%
|
|
Between £1.5 billion to £2
billion
|
0.45%
|
|
Above £2 billion
|
0.40%
|
(ii)
Timing of fees
The Existing IAA provides for 75% of the management
fee to be paid monthly and the remaining 25% of the management fee
to be paid semi-annually. The New IAA provides that 100% of the
management fee will be paid monthly such that there is no
semi-annual management fee.
(iii)
Termination payment
In order to remain aligned with the fee basis with
the change from net asset value to market capitalisation, the
termination payment due in the event of a takeover, delisting or
liquidation will be based on the offer value or net consideration
due to shareholders rather than on the prevailing net asset value
of the Company.
(iv)
Payment services
The Investment Adviser will provide payment services
for a fee of £150,000 per annum.
(b) The New
AIFM Agreement
The New AIFM Agreement is on materially the same
terms as the Company's existing AIFM agreement except as
follows:
(i)
Fees
The New AIFM shall be entitled to receive an annual
fee of £135,000 from the Company.
(ii)
AIFM related changes
Certain changes have been made to reflect the New
AIFM's UK regulated status, to update regulatory references and to
reflect the AIFM's responsibilities under relevant regulation.
(c) The
New Company Secretarial Services Agreement
The New Company Secretarial Services Agreement is on
materially the same terms as the Company's existing company
secretarial services agreement except as follows:
(i)
Fees
Hafren shall be entitled to receive an annual fee of
£250,000 from the Company.
(ii)
Term
The initial term of the agreement is two years (the
initial term of the Company's existing company secretarial services
agreement is 18 months). The agreement may be terminated on not
less than 6 months' notice after the initial term (the Company's
existing company secretarial services agreement may be terminated
on not less than 3 months' written notice after the initial
term).
For the avoidance of doubt, each New Service
Agreement provides that the amount of fees or other remuneration
payable by the Company to the Investment Adviser in any
twelve-month period, when aggregated with any other fees or other
remuneration payable by the Company to the Investment Adviser or a
member of the Investment Adviser's group shall not exceed 4.99% of
the Company's net asset value.