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Property investment group LondonMetric has increased its exposure to the convenience sector with the £26m purchase of a portfolio of five M&S Simply Food stores. The listed group worked in partnership with Marks & Spencer on the deal.
LondonMetric simultaneously re-geared the leases on four of the properties to new 20-year leases, with the fifth site consisting of two units let to M&S for 15 years and to Aldi for 20 years.
The five properties have a weighted average unexpired lease term (WAULT) of 19.2 years and an overall rental income of £1.5m a year, subject to contractual uplifts.
The purpose-built food stores are situated across various locations in England, including the Isle of Wight, Liverpool and Ferndown, with an average property size of 16,400 sq ft.
“The convenience food sector is continuing to grow at the expense of the traditional larger food stores and we will look to increase our exposure to this sub-sector in expectation of sustainable rental growth and further yield compression,” LondonMetric CEO Andrew Jones said.
“These transactions with M&S are further evidence of the quality of our relationships with the UK’s leading retailers and our ability to work alongside them as their real estate partner of choice.”
The acquisitions are in addition to a recent letting of 11,300 sq ft to M&S for 20 years at the LondonMetric’s retail park in Tonbridge.
LondonMetric’s convenience retail portfolio has now increased to £49.7m, comprising ten properties let to retailers including Aldi, Boots, Iceland and M&S, with a WAULT of 15.9 years and with 63% of income subject to fixed uplift or RPI increases.
Morning update
British American Tobacco (BATS) has said this morning that there were “strong legal grounds” to appeal a historic ruling last night in the Canadian courts. The court ordered the country’s three largest tobacco companies to pay C$15.5bn (£8bn) to smokers who claimed that they had never been warned about the dangers of smoking. It is the largest award for damages in the country’s history.
The judgement follows a ten-year legal challenge against British American Tobacco Canadian subsidiary Imperial Tobacco Canada and the subsidiaries of Philip Morris International and Japan Tobacco International, Rothmans Benson & Hedges and JTI-MacDonald.
“There are strong legal grounds with which to challenge both the overall judgement, and to seek a stay of the provisional execution order, which Imperial Tobacco Canada will do within 30 days of the original 27th May ruling,” BAT said in a statement to the London Stock Exchange this morning. “As such, no payments will be made until the request to stay the provisional execution order has been heard and a judgement made.”
The tobacco giant’s share price has fallen 1.9% to 3,524p so far this morning.
A tough week for Morrisons (MRW) looks set to continue as it readies itself for demotion from the list of London’s 100 blue-chip stocks. A FTSE committee is scheduled to review the constituents of the FTSE 100 and 250 tomorrow using the closing prices from today’s session. Discount chain B&M European Value Retail (BME) is one of the companies jostling for promotion to the FTSE 250.
Morrisons moved into the FTSE 100 back in 2001 but has had a turbulent time of in in the past year as it suffered badly at the hands of the discounters. Its shares were trading at about 330p at the group’s 2007 peak but are now at 169.5p – the lowest the stock has been since December 2014.
Its fall from the leading index would come in a week in which Thursday’s AGM is expected to feature protests at the massive payoff for former CEO Dalton Philips and this morning’s latest Kantar figures.
Yesterday in the City
Beleaguered Real Good Foods (RGF) defied a downbeat market yesterday to jump 8.2% higher after an upbeat trading statement.
The firm announced its intention to grow via acquisition now it has disposed of its struggling Napier Brown sugar business – focussing on cake decoration, ingredients and premium bakery. The shares neared their annual high of 48p (recorded in early May) and closed 8.2% up at 47p.
More generally the FTSE 100 closed 0.4% down to 6,953.6pts after weaker than expected manufacturing data. Markit’s monthly UK Purchasing Managers’ Index (PMI) for manufacturing rose to 52 in May from 51.8 in April, but this growth was below analyst expectations.
Among the day’s major fallers were Imperial Tobacco (IMT), down 1.9% to 3,306p, and Tate & Lyle, (TATE) down 1.6% to 573p.
The supermarkets were also down ahead of this morning’s Kantar market share data, with Sainsbury’s (SBRY) down 1.5% to 248p, Tesco (TSCO) down 1.3% to 209.8p and Morrisons (MRW) down 0.9% to 169.4p.
However, Thorntons (THT) shares shot up at the end of the day, jumping 7.8% to 107.5p after trading below par through most of Monday.
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