UK property investor Supermarket Income REIT (SUPR) and US alternative asset manager Blue Owl Capital have formed a joint venture targeting up to £1 billion (€1.2 billion) in UK supermarket real estate acquisitions.
SUPR contributed eight existing properties from its portfolio to the joint venture, valued at £403 million (€472 million).
These include stores leased to major UK grocery retailers, such as Morrisons, Sainsbury’s, and Tesco, located across various UK locations including Sheffield, Cheltenham, Huddersfield, Cumbernauld, Llanelli, Stoke-on-Trent, and Worcester.
Joint Venture
SUPR will retain a 50% stake in the joint venture and receive £200 million (€234 million) in cash. The company will use the resources raised to reduce debt and fund further acquisitions.
SUPR will also manage the venture, earning fees, and potential performance bonuses.
The deal gives SUPR a right of first refusal over pipeline assets which meet specific investment criteria, according a London Stock Exchange filing.
UK Grocery Market
This joint venture marks Blue Owl’s first significant investment in the UK grocery market.
SUPR CEO, Robert Abraham, welcomed Blue Owl, adding that it sees it as a strong capital partner that shares its confidence in the UK supermarket sector. He sees the joint venture as an endorsement of SUPR’s expertise in this market.
“For our shareholders, the JV is another important milestone in our strategy to recycle capital and grow earnings, and provides a platform for future growth with specialist third party capital. […],” he added.
Blue Owl’s co-president and global head of Real Assets, Marc Zahr, highlighted SUPR’s leading position in UK’s grocery real estate, making it the ideal partner for Blue Owl’s first major foray into this sector.
He anticipates strong returns from these assets, driven by the resilient and growing UK grocery market.