Supermarket Income REIT plc

Thanks, Alessandro. Good afternoon, everyone.

Thank you for dialing in for our results presentation. You can see on the page here, the headline we've been running with is it's been a transformational year.

And I think we've got a really positive story that we'll take you through. I'm Rob Abraham, CEO of Supermarket Income REIT.

I'm joined by Mike Perkins, CFO. And let me first just take you through some of those highlights.

from the year that, as I say, has been transformational. We've demonstrated alignment with shareholders.

We've been demonstrating asset values, and we've been demonstrating affordable rents. And those 3 items have really helped us to drive value for shareholders, and we've seen a corresponding reaction in the share price.

So that really has been achieved by delivering on our key strategic objectives. Firstly, lease renewals.

These were done 13% above our value as ERV. Internalization and the cost savings -- material cost savings from internalizing the management means that we're now targeting an EPRA cost ratio of below 9% and materially improved dividend cover.

A strategic joint venture. That's a GBP 403 million partnership with Blue Owl Capital, and that has released proceeds for us alongside as part of our capital recycling strategy, alongside other disposals that we're now able to deploy into accretive acquisitions.

Debut bond issuance. This is something Mike and the team have worked hard on just in July, which is a GBP 250 million 6-year unsecured bond for the first time.

And then lastly, changes to our listing. So, the secondary listing on the Johannesburg Stock Exchange and the commercial companies category.

So, we changed to that category. That just allows us to appeal to a broader range of investors and enhance liquidity in the shares, and we're starting to see the benefits of that come through now.

So, I think if you were to take any kind of 2 of these deliverables in any given year and a company might refer to a transformational year with 6 of these delivered, it really has been a kind of significant step forward for the business. And all of that's been achieved at a time when Super's investment case is as compelling as it's ever been.

We're operating in a defensive sector. Grocery is nondiscretionary spend, and that just means it's resilient through economic cycles.

We've got strong tenants, which are the leading and largest grocery supermarket operators, and that means we're providing stable and predictable income, and we've got 11-year WAULT on our leases. The portfolio we own is a mission-critical last mile omnichannel fulfillment hubs.

So, these are critical assets to our tenants. And those stores are seeing growing like-for-like sales, and that just provides for our own rental increases coming through as landlord being sustainable.

We've also got a cost-efficient shareholder aligned team of sector specialists now following the internalization and bringing all that together means we're now positioned for growth with a very attractive pipeline to deploy capital into. So, on that, I will hand over to Mike to take you through the numbers, and then I'll come back to the strategy.

Great. Thanks, Rob.

Good afternoon, everybody. If we start with the highlights for the year set out on this page, GBP 115 million of net rental income, that does include our share of joint venture rents.

That was up 7.3% year-on-year. The -- as Rob mentioned, the internalization has started to deliver cost savings.

So, you can see the EPRA cost ratio is down to 13%, and we'll jump into that into more detail later on in the slide deck. We declared dividends of 6.12p, which is up 1%.

Portfolio valuation of GBP 1.6 billion was up 1.9% on a like-for-like basis and EPRA NTA was 87.1p, which was broadly flat over the year, but we'll take you through the evolution of NAV since June '24 later on in the slide deck and total accounting return of 7.2%. So, looking at rental income in greater detail, as mentioned, 7.3% increase year-on-year set out in this chart is the drivers of that growth.

You can see GBP 1.9 million growth coming from like-for-like growth. We completed 45 rent reviews across the year, and they were settled at an average uplift of 3.4%, GBP 8.6 million coming from acquisitions.

Now that reflects in part of full years of income from assets we acquired in '24 and also some revenue coming through from assets we've acquired in the current financial year. And the disposals of Tesco Newmarket and our joint venture disposal resulted in GBP 2.2 million reduction in rent, but that is a part year impact, and we'll take you through the next slide, the impact -- the full year impact on passing rents as a result of those transactions.

But those charts, graphics on the right, you can see 100% occupancy, 100% rent collection again, really gives us underscored by our asset quality and tenant base. And we have predominantly single-let assets.

So, there's very little income leakage through to service charge or void costs. And you can see 99.3% gross to net rent ratio is one of the highest across the sector.

So just to go into slightly more detail around the impact of the disposals on passing rents. So, we set out on this slide here, the movement in passing rent from June '24 to June '25.

So, you can see the first chart, GBP 7.4 million of growth coming from acquisitions and like-for-like growth. The new market disposal resulted in GBP 3.5 million reduction in rental income.

The proceeds of the new market disposal part of the proceeds were used to fund the management internalization, and that was done at a 19% yield on cost. And then the final chart bar on the chart, the joint venture.

So, we completed the JV with Blue Owl in May '25, and that's resulted in GBP 14.3 million reduction in passing rent. But what that has transaction has unlocked is that we've now received GBP 200 million in net proceeds.

The disposal was a 6.6% initial yield, and that was done at a 3% premium to previous book values. And set out here on this slide is the evolution of the EPRA cost ratio.

As we've mentioned, we are targeting the 9% cost ratio. You can see from the chart that reduction from FY '24 to FY '25 was about 170 basis points.

So, you can see 13% EPRA cost ratio for FY '25. And our target of sub-9%, we believe we can get to very quickly.

Clearly, we've only benefited from 1 quarter's worth of savings from the management fee post internalization. So, we'll get the full benefit of those savings coming through in FY '26 and beyond.

And then we'd estimate there, that equates to approximately 35% reduction in costs versus FY '24. And just putting that into context as to where Super sits relative to our peer group.

The peer group here is FTSE 350 listed REITs. Clearly, at 13%, we are already one of the leading or most efficient platforms in the sector and delivering the sub-9% target would very much further improve our sort of weighting towards getting closer to the lowest cost base in the sector.

So EPRA earnings per share was 6p for the year, which was a slight reduction from the prior year, principally due to the disposals made and their proximity to the year-end. So starting -- starting with the chart on the left, we can see the core earnings up 0.1p and that's really a reflection of 0.9p coming from like-for-like growth in our rental portfolio, but also from acquisitions.

The cost savings we've achieved in the year have improved earnings by about 0.1p. And then we have been -- that has been partially offset or largely offset by an increase in financing costs now that is broadly 50% due to an increase in average drawn debt over the period and then also due to an increase in weighted average debt costs.

The disposals, you can see, 0.2p impact on the EPS, but 6p represents on the dividends declared in the year is 98% covered. So, turning to the balance sheet.

We can see here in the chart is a bridge from June '24 to June '25. So, we've covered across the components of the 6p EPRA earnings, 6.1p dividends paid.

And as I mentioned, that was 98% covered by earnings. And what is quite interesting in terms of the valuation or revaluation of the portfolios is we -- the NAV increased by 2.2p as a result of our active asset management during the year.

And what we've done is just break that down further. So, the first bar in the middle there, 0.9p of NAV growth coming through realized gains from the disposal of Newmarket and the joint venture.

They were blended 4.4% premium to book value. 0.8p coming from the lease regears, the 3 lease regears that we did in the year, and Rob will talk to those in more detail later on.

And then finally, 0.5p of unrealized gains property yields were broadly flat during the year. So that growth is coming from rent -- the contracted growth in the portfolio, leading to an increase in capital values.

And those combined have offset the cost of internalization. So obviously that was a one-off payment to the previous investment adviser, and that was 1.7p relative to NAV.

So across the year, broadly flat, but a lot of activity in the year. And as I said, the active asset management more than offsetting the cost of internalizing the company's management function.

And then at the bottom, you can see that results in a 7.2% total accounting return, which is underpinned by highly secure income. Nearly 80% of our portfolio is investment grade.

So it's a very secure income-driven total accounting return. We've been very active in improving or targeting an improvement in our average debt maturity profile.

So you see in the chart on the left, we show the debt maturity profile as of June '24, and that was 2 years average maturity, the refinancings that we've done in the year, which included 2 private placements and as Rob mentioned earlier, our debut bond issuance shortly after the year-end, we're able to increase our debt maturity profile to 3.9 years as of today. But importantly, for us, the private placements and the bonds raised GBP 355 million of new debt at an average tenure of 6.2 years and fixed at 5%, which we think is a really attractive price relative to where we're seeing pipeline transactions at the moment.

Just to take you through the bond issuance in greater detail, as mentioned completed, there was a window of opportunity for us to transact in July, we managed to execute in that window. The GBP 250 million issuance, 6-year tenor was 115 basis points over gilts and that resulted in a coupon of 5.125% with the issuance being 3x oversubscribed.

So significant confidence from the investors in our business model and our strategy. But part of the key strategic benefits for us on the right there, it improves or aids our transition to 100% unsecured debt stack.

100% of our drawn debt as of today is now unsecured. We further diversified the capital structure, which will help us grow as a business in the future.

As I mentioned, it extended the debt maturity profile by approximately 2 years. Lowers our medium-term borrowing costs and enhances the earnings accretion of our acquisition pipeline.

Staying on debt for now, just to look at greater detail in these covenants. So, we set out 2 charts on this slide.

The top one is the net debt-to-EBITDA ratio. Clearly, with the joint venture completing in May '25, we used the net proceeds of that in the short term to repay debt.

So, you can see net debt to EBITDA at June '25 was 5.1x. And in the chart beneath, you can see 31% loan-to-value, which is down from 37% in the prior year, but we would expect those 2 to increase as we deploy the pipeline.

100% of our debt is now -- drawn debt is fixed or hedged to term and the average debt cost stands today at 4.8% and we have GBP 350 million of undrawn liquidity headroom, which we'll be able to utilize to make acquisitions, which will be earnings enhancing. And just I would probably just say as a reminder, our policy on leverage is to operate between 30% to 40%, but we will where we see accretive acquisitions.

We're happy to -- given the stage of the property cycle we're in, we're happy to take leverage to the low 40s as we've demonstrated previously, but we'll only do so where we've got a clear pathway to come back down to that 30% to 40% where we will look to operate in the medium term. So in summary, we've delivered material cost reductions, targeting that EPRA cost ratio below 9% materially improved our debt maturity with the 2 private placements and bond issuance.

And with GBP 350 million of liquidity headroom, we are well positioned for growth. And I'll hand back to Rob to talk through the strategic update.

Thank you, Mike. So just to start with the grocery market.

And of course, we're fortunate, as I said earlier, to operate in what is a very defensive growing grocery market is nondiscretionary spend. And you can see on this chart that consistent growth, 4.3% per annum since Super's IPO in 2017, forecast to reach GBP 259 billion of sales this year.

So it really is a huge market, and we've got tenants that are absolutely huge players within that. But of course, that growth isn't evenly distributed.

On the left-hand side, you've got our key -- our largest tenants, Tesco's and Sainsbury's. They have been winning through scale.

Grocery is ultimately a scale-driven exercise. The larger you are, the more buying power you have and therefore, the wider margins you have, and that gives you the ability to be most competitive on price whilst preserving margins.

So, they've been able to capitalize on poor performance elsewhere. It's been well publicized.

Morrisons, Asda, they have suffered more recently, but they have certainly suffered over the last 12, 24 months. They've lost market share.

Like-for-like sales are still down for the likes of Asda, but Morrisons has returned to growth, and we're really starting to see I guess, the green shoots of recovery coming through for the turnaround strategies for those operators and Aldi and Lidl have been some of the beneficiaries there as they continue to pursue growth, they're investing heavily in new store openings. It's the fastest-growing channel, but we are starting to see them open stores or we've been seeing them open stores in more highly competitive areas.

And of course, it therefore gets increasingly difficult to make the return stack on a new store. So, it is the discounters that have been making the headlines.

And you can see in this chart, the growth in sales by channel across the total market, discount food stores up 26% since 2022, large format up 13% and convenience up 9% -- but then when you adjust that to reflect the additional new space that has come online in each of those channels, you can see discount has actually only grown by 5% on a sales per square foot basis. And as I mentioned, we think it's going to get increasingly difficult to be opening new stores and finding sites.

In the middle there, you can see large format. That's really been what is actually very profitable growth for large-format stores because it's largely coming from existing space.

So, 12% increase in sales per square foot from existing large-format stores. And then again, you compare that to convenience, another big growth channel in terms of new space for operators.

And when you adjust for that, then it's only 4% growth increase in sales per square foot. So is that middle box is where we really operate, and it's those stores that we own that are seeing the most profitable growth come through.

And it's for that reason that you're seeing Tesco also spending a further GBP 130 million during the year, buying back large-format stores such as the ones we own, 3 examples on this page. Southwark, Congleton, and then the last one, Newmarket, is actually Super store that we sold back to Tesco at 7% above book value.

So, these transactions, if you want, who knows more about kind of grocery and the value of the real estate than Tesco? They are the ultimate insider, and they're spending GBP 130 million buying back these large format stores.

It demonstrates exactly how strategically important these large format stores are to the business. And then we are also seeing market evidence, which is providing upwards pressure on rents in the supermarket space.

On the left-hand side, you've got the three lease renewals that Super undertook. On the three shortest leases in Super's portfolio, we reset the term to 15 years with RPI-linked increases.

That was 13% above the value of ERV, as I mentioned earlier, but very importantly, a 4% rent to turnover benchmark and that's the most important metric in our space is rent to turnover. So, it's all about the affordability of the rent relative to the sales performance.

One TG Oxford share in the middle there, this was a Sainsbury's lease renewal. They entered into a 25-year inflation-linked lease.

That was actually acquired at 4.5% net initial yield. Really importantly, again, the 4% rent to turnover metric being proven out.

And then lastly, home-based conversion. So, demonstrating exactly how difficult it is to find sites for food stores and demonstrate the value in the existing properties.

It's the fact that Sainsbury's and M&S they've taken around 25 of the former Homebase stores and they're paying rents. I believe it's Colliers reporting that rents of up to GBP 28 per square foot have been paid.

And of course, that also requires, if it's a Homebase unit and you have to convert it to a supermarket, it requires significant tenant capital investment to refit those stores. As I say, the combination of this slide and the page before really highlighting the value and importance of owning good food stores to the tenants.

And it's in that context that we look at Super's average rent to turnover at 4% and GBP 23 per square foot as being highly affordable. So now turning to our portfolio.

Mentioned earlier, we've got a portfolio let to the leading and largest supermarket operators in both the UK and France. Total value of GBP 1.7 billion.

That's across 84 Supermarket sites. They're valued at a net initial yield of 5.9% and 93% of those stores are omnichannel.

When we say omnichannel, we mean fulfilling online home delivery as well as your traditional in-store shopping. And you can see there in the bottom left, Tesco 44%, Sainsbury's 31% are very much our key tenants, and they are also the tenants seeing the strongest performance at the moment.

We also look to generate value in the portfolio through active management of the sites. I mentioned on the left-hand side already, the lease renewals that we undertook on those three Tesco stores that achieved an 8% capital value increase on those.

In the middle column there, where we've got some larger sites that have some non-grocery exposure, we had two Homebase stores. They were both rapidly relet to, in the example on the screen, you've got The Range.

At the other site, it was B&M, and through that, it was a 10% capital value increase. So, we underwrote acquisition of those sites.

We underwrote the Homebase covenant risk very conservatively. So, we were able to achieve, by getting some better quality tenants in there, a capital value uplift.

That was 78,000 square foot of what was vacancy risk. And we've been able to relet that rapidly.

There's very little in terms of any lost income. And then lastly on this page, just attractive development opportunities.

Because we own these really kind of attractive sites that get high footfall, and we're able to develop, and we've got a discount operator we're developing a new store for, achieving an 8% yield on cost there for a new 20,000 square foot store with a 15-year inflation-linked lease. So where we're able to, we're pulling the levers to really maximize those returns for shareholders.

To the investment market now. So, Supermarket yields present a buying opportunity.

You can see there, if you look at that dark blue line, you can see it's plateaued. It's currently at 6.3%.

The MSCI Supermarket's net initial yield, it has flattened out around the level where we last saw the peak in 2009. And actually, we've plotted on there Super's own portfolio net initial yield at 5.9%, which is tighter than MSCI, just reflecting the better quality of assets we own.

But it's still a very attractive level compared to the MSCI All Property Index. And of course, with a higher net initial yield, that just means you're getting a higher proportion of your return in income, which is known and certain, which is very valuable in the current environment.

Whilst we're not expecting yields to kind of, if you look back at 2009, yields tightened very quickly once again, and that was a result of interest rates being rapidly cut to zero effectively. Obviously, we're not expecting that this time, but what we are seeing is investment market activity that makes us confident that yields have peaked, and that it is therefore a good buying opportunity.

Just to take you through some examples of the transactions that have been taking place in our market, a few on this page. The four on the left were acquired by other parties.

We are the sector specialists, so we see everything in our market. If you have a supermarket to sell, we are one of the first calls that you will make.

So, we see everything. And of course, we considered these stores on the left an example there, Tesco Bracknell in the middle at the bottom, GBP 50 million lot size, 6.2% net initial yield.

This store was really quite over-rented. That was actually bought by an ultra-high net worth individual.

So just -- the example above that, by a local government pension scheme. You've got a real range of purchasers in our space, including institutional buyers.

That just means there's a real depth of liquidity. But then on the right-hand side of the page, two examples there of stores that we acquired.

Just to take you through an example of the types of assets that we've been buying. So, this is Tesco Ashford.

We acquired it in July of this year at a 7% net initial yield. That was about GBP 54 million with a nine-year lease remaining term.

And it's got annual RPI-linked uplifts, rent reviews capped at 5%. We get that really visible growing contractual income growth.

It's a strong trading store. It's Q1 on trading density.

It's got 14 home delivery vans. That means it's a large omnichannel hub for Tesco.

If you look at that satellite in the bottom left, you can see standalone food store, big home delivery section at the back, large car park. And if you were to zoom this out, you would see it's got excellent connectivity on the roads there, and it's got a catchment population of 300,000 to 400,000 that it's serving through that online delivery.

That just means it's a really mission-critical hub for Tesco in its online fulfillment, given they have such strong online market share as well. And it's not just us seeing the value in those types of opportunities.

So, we did establish a joint venture during the year, and that joint venture targets those sort of higher yielding Tesco's and Sainsbury's. The JV itself, the rationale there for establishing a vehicle like this instead of just selling assets outright, you get financial flexibility.

You see you're releasing capital that we can then recycle and deploy elsewhere. We're able to scale in that instance through third-party capital at a time when raising in the equity markets has not been an option for us.

It's been prohibitively expensive. Our dividend yield at 7.8% or so today is very attractive as an investor, but raising additional equity, that is relatively expensive compared to transacting with a third party.

We get paid a management fee on their interest, and we've got a very credible third party supporting our investment thesis. But we also retain ownership.

So, we sold 50% interest. That means we're able to retain half, and we have an option to buy those stores back in the future, ultimately at the market value as of when our partner wishes to exit.

And the management fee itself is attractive. It's GBP 1.2 million a year.

So that makes a meaningful contribution to our earnings with actually not too much additional management intensity. It is value add from our perspective because it's our tenant relationships that really drive the value when it comes to the higher yielding stores and being able to underwrite that risk.

But that's where our kind of value and the value of the platform comes into play. There is an opportunity or an aspiration to grow this vehicle to GBP 1 billion over time.

It will depend on how that pipeline evolves as to exactly how it grows. With GBP 400 million of day-one scale, there is no pressure to grow that vehicle.

It was certainly worthwhile or sufficiently worthwhile by seeding it with those assets. So then where are we looking to deploy the capital that we've effectively raised by creating that joint venture?

Well, on the left-hand side, you've got Tesco, Sainsbury's, high-yielding opportunities. These give you around 10 years of income, but from investment-grade operators, so very strong tenants.

In the second column, you've got the private equity-backed operators in Asda and Morrisons. Now there is a value opportunity there because you are able to achieve net initial yields that are higher up, 6.5%, maybe 7% plus, but for lease terms of 20, 25 years.

So, you are getting compensated for the additional kind of risk with the fact that they are not investment grade. In the third column there, you've got Carrefour.

So only 5% of our portfolio today is in France. That allows us to deploy capital at a net initial yield of 6% to 6.5%.

But it's worth remembering that Mike and the team put in place private placements during the year. So, we're able to borrow euro funding at a much lower rate than sterling.

You borrow at around 4% versus the equivalent, say, 5.25% in the UK. So you get a really attractive spread between the net initial yield and the cost of debt for an investment-grade tenant.

And then lastly, smaller format. So those of you who've followed us for some time will know that our primary focus is on large format omnichannel stores.

But actually we do see some value opportunity in smaller format, maybe even down to convenience, where you've got lot sizes of GBP 1.5 million to GBP 5 million or so. But you get 10, 15-year triple net leases from the likes of Sainsbury's, Tesco, but also a broader range of operators, M&S, Waitrose, Co-op.

And what you get here is net initial yields of 6%, 6.5%. You're getting about 100 basis points additional yield for the smaller format than you do for a large format store with the same lease structure.

So, there is some real relative value there for us. It's not that we're going to pile hundreds of millions into that.

It takes longer to deploy capital into more granular units, but actually we do see some real relative value. Just to summarize there on the outlook, so we've got a cost-efficient platform for growth.

So, with a high-caliber team of sector specialists, the internalization means that Super itself is able to capture the upside of that team as we do transactions like the joint venture. We're able to capture that in earnings, the management fee, and we are able to have one of the lowest EPRA cost ratios in the sector, as Mike talked to.

We've got a really attractive pipeline and opportunity to deploy capital into those assets. And as Mike talked to, we've got a good couple of hundred million of capacity to now do that.

And in doing so, we'll be enhancing earnings. And what we're targeting by the end of this financial year is to have demonstrated to the market a fully covered and growing dividend by the time we get to the end of the year.

And I think that's the real catalyst, the real driver for us taking the business back to a point where we should be really trading at or around NAV, I would hope and closing out that discount. That is a big focus for us, and as is driving kind of investor demands by doing presentations, whether it's in a format like this or just we're out on our investor roadshow in the next couple of weeks, and we are seeing as many names as we can.

And we're looking to build awareness of Super and looking to drive those additional buyers of the stock and create some positive momentum. So with that, I think we will turn to Q&A.

I've just done a lot of speaking there, so I might ask Mike to go first. We've got some questions on the platform.

Mike, there's one there around the portfolio WAULT. Why don't you start with that one, please?

Sure. We'll do.

So, the question around the historic, current, and medium-term expectations for our WAULT. As we said, our WAULT today is 11 years.

We have seen that naturally tick down given passage of time, but leases now typically are set at 15 years. So, we demonstrated with the three lease regears we did, new leases are typically set at 15 years.

So, on that basis, we would expect to be targeting a WAULT in the medium term of between 10 to 12 years and managing that WAULT actively by regears or portfolio composition. So, it is very much a number that's in our control and something that we're cognizant of.

There is another question here around NAV. While the company's grown through both equity and capital raises, NTA has gone from 108p in 2021 to 87p in June 2024.

And commenting on that. So, I guess, real estate is cyclical.

Clearly, yields probably were at their low point around 2022. And then we have this mini-budget at the end of 2022 that did see property yields move up.

So, we weren't -- I guess we weren't the only real estate company that would have seen the NAV decline over that time. I guess the point for us now is trying to demonstrate our NAV.

And we were able to effectively sell GBP 466 million of assets, also retaining an interest in the JV, but we sold those as a blended premium to book value at 4%. So, we are incredibly comfortable with where our NAV is.

We have been able to grow the NAV. So, within the lease regears that provide an 8% increase, the relettings at home basis 10% capital uplift as a result of those.

So, we are able to drive that sort of total return. But we aren't immune to the cyclical nature of real estate, but that wouldn't be isolated to just our company.

Where we see yields now, yields are flat over the year. We see much more competition in when we're bidding for assets.

So, we feel that where we -- what we're seeing in the market is that definitely yields have peaked, and we would expect the next movement to hopefully be down. And we would be the beneficiaries of NAV growth thereafter.

Thanks, Mike. Why don't I take one of the next ones just around business rates review?

So, what effect would a potential increase in business rates on large commercial premises have on Super? So, this is, as you'd expect, something we have, of course, to work on as soon as there were announcements around potential changes.

I think the starting point is that a large format store will turn over, say, GBP 70 million plus a year of revenue for the tenant. And the increase in business rates cost will be typically around GBP 100,000 a year for a store of that size.

So relative to total trade and performance, it isn't that significant. Clearly, it has an impact on profitability, but again, it's largely marginal at the operator's total business level.

It's, of course, unwelcome and just further adds to pressure for increasing food prices and food price inflation. And because the grocers operate, supermarkets are ultimately a relatively fine margin business.

So, costs are pretty efficiently passed through, and margins are largely maintained over time. So actually, we're not really anticipating an impact.

It doesn't materially move the needle in terms of the tenant's occupancy cost versus rent and existing rates bill. But what I do think you'll see is just, along with national insurance changes, just it will translate into higher food prices for consumers, which is clearly unfortunate.

From a landlord's perspective, we are pretty insulated. And this all comes back to the benefit of being in what is absolutely a non-discretionary sector, as the demand is very, very robust when it comes to food.

There's a question around the potential proposals for the government banning upward only rent reviews and the potential effects on Super. I guess it is still very early stages.

And so, we'll keep a very close eye on how that legislation evolves. Again, one of the differences, though, in supermarkets is your tenants want to secure long-term occupation of these assets.

So, our tenants are the ones who want to lease sub 10 years. They want to reset it back to 15.

If there is a ban on upward only rent reviews, well then that changes potentially the willingness of the landlord to grant those long leases. So, it's too early to say, but what we may well see is, for instance, a move to fixed uplifts of a few percent a year rather than inflation linkage.

Who knows? But what I would say is, again, I think supermarkets will be one of the best placed assets to kind of deal with that.

Another one, in a moment, Mike, I'll ask you to do the one on the JV warehousing, but I'll take the one before that, which is just around two of the larger Big Four supermarkets are in a far better financial shape than the other two. How do you view the risk of acquiring supermarkets from the two weaker companies?

Which is a great question. Fundamentally, supermarkets and grocery, it's a localized market.

Shoppers will not travel typically more than 10 minutes to do their shop. Typically, they won't travel past one supermarket to go to another one.

So, what you really need to do is make sure you're buying the best performing stores in those markets. And that's our job as sector specialists is understanding that market, underwriting at the market level.

But also, we should have a very good handle on the balance sheets of the operators and their own strategies, and we're taking a view on those. But first and foremost, you acquire the top performing stores because top performing food stores simply don't go vacant.

They might change operator. They do not go vacant.

But also it's underwriting that kind of credit risk, and we're well placed to do it. I would say we are very much underweight those names at the moment.

We only have 2% exposure to Asda, 4% exposure to Morrisons. So yes, we're in a good place from that perspective.

I'll take there's a question coming around the joint venture. We refer to assets being warehoused, pipeline, and what is Blue Owl Capital's asset horizon, and are they only baked in mechanics of privacy?

Well, I guess to take data, when we refer to warehousing pipeline, typically once these assets are acquired, because they're typically long-term holders of the stock, once the asset's gone, it'll be some time before you see it back in the market. So, part of the rationale for the joint venture was that we were able to, when the equity markets were closed, we were able to raise capital and sell a 50% interest in our own assets.

And we have a right of first refusal that when they sold the Super will get a right of first refusal, so potential to buy those stores back in on Super's balance sheet directly in the future. In terms of the exit horizon and the pricing for buying stores back in, yes, we'd typically expect the horizon to be probably five to seven years.

We'd imagine the time we're looking to, our partner would be looking to exit. There's no predetermined pricing.

There'll just be fair market value as determined at the point of sale. So yes, it'll be done at market rates as determined by independent valuers at the time.

There's another one. Like many people, the supermarkets come to me via home delivery now these days.

Given warehouses are cheaper than stores, do you think a risk is grocers start delivering directly from warehouses? So, that is effectively the Ocado model.

There's a very quick answer to this in that -- well, maybe not that quick. It was Asda and Sainsbury's both closed during COVID.

They both closed these, what are known as dark stores, customer fulfillment centers, these warehouses that fulfill online. They closed them during the pandemic when online grocery was really booming.

And that was to instead fulfill through stores because the biggest element of cost when it comes to grocery online is the delivery element. And the shorter you can make your delivery journey, the lower the cost it is to deliver.

So, Omnichannel stores like the ones we own are absolutely the method of fulfillment. And you may have seen some headlines in the U.S.

in the last week or so from Kroger, who've got a big partnership with Ocado, where they said they were reviewing some of those warehouses and instead looking to potentially fulfilling through stores. So, I think it's -- omnichannel has been the kind of clear winner.

And you see that across the market, over 80% of online orders are fulfilled from stores. And I think that is actually all of the questions.

One more has just come in, Rob, on would we consider bidding for a publicly listed REIT? I think, I guess on that, we want to clearly, one of the benefits of internalization for us is that we are able to potentially look at some M&A activity.

But we'd only execute on anything where there was a meaningful improvement to returns for our shareholders, be it through earnings or NAV growth. Fundamentally, I guess we would not want to dilute the story in terms of we are sort of grocery specialists.

We, as probably most are in a sector, are looking at our options, but nothing imminent that we would be talking to. But clearly, and a potential avenue that we would keep under review.

Thanks, Alessandro. Thank you, everyone, for listening in.

It's for us, as we said, transformational year, incredibly busy, lots of significant milestones, but we are not done yet. We have plenty more to do.

We've got capital to deploy. The priority now for us is getting that deployed into accretive opportunities that prove to the market a growing and covered dividend.

And I think that will, that we're aiming for that to be the next catalyst for the re-rating of the shares, as I say. Thank you all for the support.