Listed supermarket property investor Supermarket Income REIT saw the valuation of its portfolio drop by double digits amid steeply climbing interest rates and wider economic slowdown.

An independent valuation of its direct portfolio as at 31 December 2022 found its value had shrunk by 13.3% to £1.63bn over a like-for-like basis over the six-month period to that date.

The group owns 50 stores outright, including properies of Sainsbury’s, Tesco, Morrisons, Waitrose, Asda and Aldi, as well as a joint venture of 26 supermarkets with Sainsbury’s.

It said the decline in its direct portfolio valuation reflected the outward shift in property yields applied by valuers as a result of higher interest rates and the overall macroeconomic environment.

However, it pointed out that the valuation decline had been partially mitigated by its contractual inflation-linked rental uplifts.

The average increase in rent from rent reviews performed during the six-month period to 31 December 2022 was 3.7%.

The valuation reflects a net initial yield of 5.5% as at 31 December 2022, up from 4.6% a year earlier.

Ben Green, director of Atrato Capital, the investment adviser to Supermarket Income REIT, commented: “Supermarket property has been less volatile than the broader UK property market but has not been immune to the outward yield shift experienced across investment markets.

“We have the advantage of operating in the non-discretionary spend grocery sector which continues to outperform the wider economy.

“Our high quality, future proof, omnichannel supermarket property portfolio will continue to deliver stable, long term, inflation-linked income for our shareholders.”

The company will announce its half-year results for the six-month period ended on 30 March 2023.

Morning update

Retail Technology player Eagle Eye has announced that non-executive director Bill Currie will be stepping down from the board with effect from 14 March 2023, to focus on other ventures.

He has been one of Eagle Eye’s longest-standing investors, having joined the board and participated in the group’s Series A round of funding in June 2011, alongside Terry Leahy.

The board has already commenced a process to select his successor who will replace him as chair of the audit committee.

Malcolm Wall, chairman of Eagle Eye, said: “Bill has been a highly respected member of the board and important cornerstone investor since 2011, providing invaluable contributions to the direction of the business. My colleagues and I would like to extend our sincere thanks for his considerable support and wish him all the best for the future.”

Currie added: “It has been an honour to help guide Eagle Eye in its early stages of growth as both a shareholder and director and in its subsequent journey on the public markets, where it has advanced into an incredible business. I am confident that with its strong management team and board, fantastic customer base and the digital transformation of the global retail industry, Eagle Eye’s growth journey is set to continue.”

On the markets this morning, the FTSE 100 has opened down 0.3% to 7,908.8pts.

Early risers include Glanbia, up 2.8% to €11.68, Ocado, up 2.8% to 635.2p and THG, up 2.4% to 57.3p.

Fallers include Supermarket Income REIT, down 4% after this morning’s update to 91p, WH Smith, down 1.8% to 1,630p and Kerry Group, down 1.4% to €91.16.

Yesterday in the City

Danone jumped up 4.5% yesterday to €54.66 as annual revenues jumped on the back of higher prices but soaring costs squeezed the French food group’s profit margins.

The FTSE 100 ended the day down another 0.6% at 7,930.6pts.

Risers included Science in Sport, up 6% to 13.25p, McBride, up 5% to 24p, Cranswick, up 2.7% to 3,070p, PayPoint, up 2.2% to 497p, Greencore, up 2.2% to 80.5p, Kerry Group, up 2% to €92.48 and Reckitt Benckiser, up 1.8% to 5,820p.

Fallers included Domino’s Pizza Group, down 5.4% to 294.6p, Naked Wines, down 5.1% to 111.7p, Deliveroo, down 4.4% to 80.6p, Fever-Tree Drinks, up 3.1% to 1,065p, THG, up 3% to 56p, Virgin Wines, up 2.8% to 52p and Hotel Chocolat, up 2.8% to 210p.

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