Supermarket Income REIT has acquired six UK grocery properties for £98m as it pushes ahead with plans to significantly expand its portfolio.

The FTSE 250 property investor’s latest deal comprises five supermarkets alongside a grocery distribution asset, with the properties let to major grocery operators.

The five supermarkets are predominantly occupied by investment-grade tenants and have a weighted average unexpired lease term of 13 years, with average rents of £26 per sq ft.

Meanwhile, the distribution site is let to an investment-grade grocery tenant with 15 years remaining on its lease and rent of £14 per sq ft.

The acquisitions were first outlined in July when Supermarket Income REIT unveiled a £100m equity raise to help fund a £216m pipeline of nine grocery properties.

The wider pipeline also includes three supermarkets worth £118m, a Sainsbury’s in Manchester and Tesco stores in Edinburgh and Halifax, which the group agreed to acquire at an average net initial yield of 6.9 per cent.

Taken together, the nine properties comprise eight supermarkets and one distribution asset and were expected to deliver an average net initial yield of 6.6 per cent.

The investment forms part of Supermarket Income REIT’s ambition to double the size of its portfolio as it hopes to capitalise on demand for grocery real estate.

Chief executive Rob Abraham said when announcing the acquisition programme in July that the properties would support its growth strategy and were aligned with its focus on “well-located grocery assets with strong trading histories” and resilient lease structures.

As of July, Supermarket Income REIT directly and through its joint venture owned 131 supermarket assets across the UK and France with a combined value of around £2bn.

Its portfolio generated annualised passing rent of £129m, with 83 per cent of leases linked to inflation and a weighted average unexpired lease term of 12 years.

The business has increasingly focused on supermarkets that play a dual role as physical stores and online grocery fulfilment hubs, as retailers including Tesco and Sainsbury’s continue to expand their omnichannel operations.

Supermarket Income REIT is set to publish its full-year results for the year to 30 June on 16 September.

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