Sunday share tips: Supermarket Income REIT, Capital and Regional
By Alexander Bueso
Date: Monday 18 Oct 2021
(Sharecast News) - The Financial Mail on Sunday's Midas column tipped stock in Supermarket Income REIT, telling readers the company, which owns a portfolio of large supermarkets across the country is set to benefit from Britons' changed attitudes even once the pandemic was in the rear-view mirror.
Even once the pandemic passes, many Britons are hoping to continue working from home, which could boost online sales, the tipster explained.
Furthermore, a key lesson from the pandemic was that grocers' large legacy stores were not a liability, rather the opposite as it turns out.
"Smaller warehouses attached to existing stores are often more cost-effective, allowing supermarkets to serve old-school and online customers from one site," Midas said.
"As this realisation sets in, the big beasts of food retail are looking at their estates with new eyes, seeing big stores as key to their future rather than dinosaurs past their sell-by date."
Other attractions of Supermarket Income REIT included its tenant list, composed mainly of 'blue chips' such as Sainsbury, Tesco and Morrisons.
Furthermore, its founders, former Goldman Sachs bankers Ben Green and Steve Windsor, were focused on further expansion, and the company could also count on the wisdom and industry contacts of former Sainsbury boss Justin King, who is now one of its senior advisers.
Shares of Capital & Regional are worth holding onto, the Sunday Times's Sabah Meddings said in her 'Inside the City' column.
The tipster pointed out how the shopping centre operator was outperforming rivals on several key metrics.
Furthermore, its net asset value was 75% higher than its current share price, a possible indication of an "opportunity" for investors, Meddings also said.
Year-to-date, CapReg's rent-collection was running at 60% and a spate of deals may boost that figure to 70%, versus 41% at Hammerson.
In parallel, Hammerson's net asset value had plummeted 85% to 85.0p per share.
CapReg's portfolio value meanwhile had fallen by 27.5% or £200m, versus a 41% drop at another of it rivals, Intu.
Helping CapReg, many of its community-based centres, which are anchored around a grocery tenant, "put it in a strong position".
Indeed, the company was busy refurbishing its food halls to appeal to Deliveroo.
Nevertheless, Company Voluntary Arrangements were likely to continue, Meddings cautioned, and as CapReg's boss Lawrence Hutchings had argued in the past, there is 30% more retail in the UK than is needed.
Over the preceding year, 17 of CapReg's tenants had gone insolvent through CVAs, twice the 2019 figure.
"Hold", said Meddings.
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