(Alliance News) - Supermarket Income REIT PLC on Tuesday announced an agreement with its manager Atrato Group to internalise its management function, for which it needs shareholder approval.
Under the plans, current Supermarket Income managers Rob Abraham and Mike Perkins, both from Atrato, will respectively become the chief executive officer and chief financial officer of the London-based investor in property leased to grocery retailers.
Abraham is the current fund manager & managing director at Supermarkets at Atrato, while Perkins is the current finance director there.
Supermarket Income said the GBP19.7 million agreement will be funded from proceeds it received from the June 2024 sale of its large format omnichannel Tesco store in Newmarket to its operator Tesco PLC, for GBP63.5 million.
"The board believes that the company has reached a scale and maturity for which an internalised management structure is appropriate and that the internalisation delivers a number of compelling financial and strategic benefits," Supermarket Income said.
Among the benefits, it cited among others, annual cost savings of GBP4 million, a new EPRA cost ratio target of below 9%, and an improved alignment between the company, its management and shareholders. For financial year 2024 ended June 30, it had reported an EPRA cost ratio of 14.7%, down from 15.5% in financial 2023.
The targeted EPRA cost ratio of below 9% would be "one of the lowest in the sector," Supermarket Income highlighted.
The company will hold a general meeting on March 20 aimed at receiving shareholder approval for its plan. The expected effective date of the internalisation is March 25.
Chair Nick Hewson said: "SUPR is of a scale and maturity where we believe an internalised structure is appropriate as the company moves into the next phase of its growth. Alongside the other strategic initiatives that we have undertaken in recent months, it will reduce costs and deliver sustainable and growing earnings."
Supermarket Income shares were 0.1% higher at 69.89 pence each on Tuesday afternoon in London, giving it a market capitalisation of GBP871.0 million. In Johannesburg, they were flat at ZAR16.82 each.
By Tom Budszus, Alliance News slot editor
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