Supermarket Income REIT Acquires €123 Million Carrefour Portfolio in France

SUPR scales in France with €123 million Carrefour sale-and-leaseback

Supermarket Income REIT (LSE: SUPR) has snapped up a portfolio of Carrefour supermarkets in France for €123 million. It is a direct sale-and-leaseback of 20 omnichannel stores, acquired at a 6.6% net initial yield, with inflation-linked leases and low rents. This is very much on strategy: earnings accretive, dividend-supportive, and adding scale with a top-tier grocer.

There is one important nuance: the 20-store portfolio includes one site where completion is expected in Q1 2026 (agreement signed). Otherwise, the deal is done and fully funded from SUPR’s existing unsecured revolving credit facility.

What SUPR has bought: strong stores, low rents, inflation linkage

These are 20 strong performing Carrefour supermarkets integrated into the retailer’s “Drive” online network. That matters because omnichannel stores tend to be operationally critical, helping underpin lease longevity and rent affordability.

• Average gross internal area: c. 44,000 sq ft
• Average rent: €9.70 per sq ft
• Average capital value: €139 per sq ft (materially below replacement cost)
• Low competition within each catchment

The leases carry a weighted average lease term of 12 years, with a tenant-only break in year 10, and crucially they feature annual uncapped inflation-linked rent reviews. That combination – long-dated, inflation-linked income – is SUPR’s bread and butter.

Financing: positive spread over capped Euro debt

SUPR has used its unsecured revolving credit facility, drawing Euro-denominated debt with an all-in cost capped at 3.5% until June 2030 (based on a 1.50% bank margin). Set against a 6.6% net initial yield, the spread looks attractive and earnings enhancing. Following this deal, loan-to-value (LTV) sits at 40%.

The Company notes it has now fully redeployed c. £200 million of net proceeds from its April 2025 strategic joint venture with Blue Owl. The redeployment has averaged a 6.6% NIY and is expected to enhance earnings further through JV management fee income and the lower cost of Euro financing.

Strategic impact: scale with Carrefour, diversification and dividend cover

SUPR now owns 46 Carrefour stores across France, taking its French exposure to scale and achieving “critical mass” for efficient operations. On full deployment of near-term debt capacity, SUPR expects Carrefour to represent approximately 10% of gross asset value, adding meaningful diversification alongside its UK grocery exposure.

The CEO’s message is clear: capital recycling into higher-yielding, inflation-linked assets is designed to support a fully covered and growing dividend over the long term. This acquisition fits that playbook – long leases, low starting rents, below-replacement-cost assets, and funding that currently costs significantly less than the income yield.

Key numbers at a glance

Purchase price	€123 million (excluding acquisition costs)
Portfolio size	20 Carrefour supermarkets (including one under agreement, expected Q1 2026)
Net initial yield (NIY)	6.6% (assuming standard purchaser’s costs)
Average store size	c. 44,000 sq ft
Average rent	€9.70 per sq ft
Average capital value	€139 per sq ft
Lease profile	WALT 12 years; tenant break at year 10; annual uncapped inflation-linked reviews
Funding	Euro RCF; all-in cost capped at 3.5% until June 2030
Post-deal LTV	40%
Total Carrefour stores owned	46
Expected Carrefour share of GAV (post debt deployment)	c. 10%
Portfolio valuation (as at 30 June 2025)	£1.6 billion

Why this matters for shareholders

Income quality: index-linked and affordable

This is classic SUPR: long leases with inflation linkage and low entry rents. Low rents matter because they are more sustainable through cycles and make upward-only, inflation-linked uplifts easier to absorb for the tenant.

Yield spread over capped funding cost

A 6.6% initial yield vs a 3.5% capped all-in Euro cost suggests attractive initial cash-on-cash returns, supporting dividend cover. If you like the logic of buying essential retail at a healthy spread over cost of debt, this is it. Of course, the cap runs to June 2030, so refinancing terms beyond that date will matter in due course.

Scale and diversification with a blue-chip tenant

Carrefour is a leading European grocer, and SUPR now has 46 of its stores. The portfolio is geographically diversified across France and anchored by omnichannel operations. That adds resilience and gives SUPR operational scale on the continent.

The CEO’s take

Rob Abraham, CEO, said the deal takes SUPR’s French exposure “to scale” via another direct sale-and-leaseback with Carrefour, and that the company is targeting attractive UK pipeline opportunities in the coming months – all in support of a fully covered and growing dividend.

My view: positives and watchpoints

What I like

• Compelling economics: 6.6% NIY against a capped 3.5% Euro funding cost until June 2030.
• Inflation linkage: annual uncapped reviews on long leases add real income growth potential.
• Low rents and below-replacement-cost assets: supportive for tenant affordability and downside protection.
• Operational scale: 46 Carrefour stores creates efficiency and negotiating leverage.
• Capital redeployment: c. £200 million from the Blue Owl JV now fully recycled at attractive yields.

What to watch

• Tenant break option in year 10: leases are 12 years on average, but Carrefour holds a year-10 break.
• Refinancing beyond 2030: the Euro debt cost is capped until June 2030; future pricing will be important.
• Concentration: Carrefour expected to represent c. 10% of GAV after near-term deployment – sensible, but worth monitoring.
• Completion of the one remaining store: one site is under agreement to purchase, expected to complete in Q1 2026.

Bottom line: earnings accretive, dividend supportive, on strategy

This acquisition ticks the key SUPR boxes: index-linked income, strong grocer covenant, low rents, and a healthy spread over capped funding. It builds scale in France, adds diversification, and fully redeploys recent JV proceeds at a consistent 6.6% NIY.

Near-term, I expect the market to view this as supportive for dividend cover and medium-term growth. The usual sensitivities apply – particularly the 2030 refi backdrop and year-10 break – but on the disclosed terms, this is a tidy, accretive deal aligned with SUPR’s long-term strategy.