TIDMLXI
RNS Number : 7206T
LXI REIT PLC
29 March 2021
29 March 2021
LXi REIT plc
(the "Company", the "Group" or " LXi REIT ")
SEVEN LONG INCOME GROCERY ACQUISITIONS TOTALLING GBP85
MILLION
The Board of LXi REIT (ticker: LXI), the specialist
inflation-protected long income REIT, is pleased to announce seven
separate long income acquisitions in the grocery sector from six
different developers/vendors (the "Acquisitions"), following the
Company's GBP125 million capital raise on 11 March 2021.
The Acquisitions are for a total cost of GBP85 million and
comprise both pre-let forward fundings and built investments,
secured to strong tenant covenants in the structurally supported
grocery sector. They benefit from an accretive average net initial
yield of 5.25% (net of acquisition costs), a long average unexpired
lease term to first break of 19 years, are let on sustainable, low
rents and 100% of the income is inflation-linked via contractual
rental uplifts.
The Acquisitions represent approximately 70% of the net proceeds
of the recent capital raise, demonstrating the Company's ability to
execute on identified investment opportunities efficiently and in
short order. The Company has a number of other assets in
solicitors' hands which would fully deploy the balance of the
proceeds of the capital raise and further announcements are
expected to be made shortly in that regard.
Lidl forward funding, Greater London
The Company has exchanged contracts on the pre-let forward
funding of a 20,000 sq ft foodstore in East Ham, Greater London, to
be developed for and pre-let to Lidl on a 25 year lease from
completion of the construction works, with a one-off break right at
year 20. The rent will increase in line with RPI inflation on a
five yearly basis subject to a 1% pa collar and 3% pa cap.
Lidl continues to gain market share in the UK, with a store
count nearing 1,000. The grocer is part of The Schwarz Group, the
largest European retailer and the fourth largest retailer in the
world.
Asda foodstore, Glasgow
The Company has acquired a modern, c.50,000 sq ft (net sales
area) foodstore in Glasgow. The property was purpose-built for and
is let to Asda with 23 years unexpired to first break and contains
RPI rental uplifts on a five yearly basis subject to a 4% pa cap
and 0% pa collar.
The current rent is an exceptionally low GBP10 per sq ft and
represents only c.1.75% of annual store turnover, underpinned by a
store which trades very strongly. The tenant's commitment to the
location is underlined by the fact that it has traded at this site
since 1998 and has recently extended its original lease by a
further 20 years.
The store provides online connectivity through both home
delivery and click and collect and is dominant in its catchment
area, with little competition.
Tesco foodstore, Greater London
The Company has acquired a modern, purpose-built c.40,000 sq ft
(net sales area) foodstore in Bexley, Greater London. The property
is let to Tesco with 15 years unexpired to first break and RPI
rental uplifts on a five yearly basis, with a cap of 3.5% pa and
collar of 0% pa, and benefits from 255 car parking spaces and a
dense catchment population.
The store trades well and enjoys a dominant position in the
locality with no other large Tesco stores within 15 minutes of the
property. The catchment includes 110,990 residents who live within
an estimated 10 minute drive, which increases to 307,086 residents
within a 15 minute drive.
Tesco is a FTSE 100 company, with a market cap of GBP18 billion,
and is the UK's largest grocer.
Aldi foodstore and Home Bargains, Denbighshire
The Company has acquired a modern 19,000 sq ft Aldi foodstore
and adjoining 15,000 sq ft Home Bargains in Llangollen,
Denbighshire.
The property benefits from an overriding lease of the whole of
both units to Sainsbury's Supermarkets Limited, with just under 20
years unexpired on the lease to first break and RPI rental uplifts
on a five yearly basis, collared at 1% pa and capped at 3.5% pa.
Aldi and Home Bargains occupy by virtue of 20 year and 15 year,
RPI-linked subleases.
The Aldi and Home Bargains units trade very well and the
investment benefits from the double layer of Sainsbury's and
Aldi/Home Bargains covenants. Sainsbury's is the UK's second
largest grocer, with a GBP5.2 billion market cap.
Co-op convenience store and PFS forward funding,
Leicestershire
The Company has exchanged contracts on the pre-let forward
funding of a 4,500 sq ft convenience foodstore and petrol filling
station in Ellistown, Leicestershire, to be developed for and
pre-let to the Co-op on an unbroken 20 year lease from completion
of construction works. The asset benefits from a large catchment
population and good transportation links whilst the rent will
increase in line with CPI inflation on a five yearly basis, subject
to a 4% pa cap and 1% pa collar.
1.7 million new households shopped at the Co-op in 2020, as
working from home drove convenience store sales. This elevated
Co-op's market share to over 7%, the highest in nearly 20 years.
The Co-op group's latest annual accounts show revenue increased 8%
to GBP5.8 billion and a net asset value of GBP2.9 billion.
Co-op convenience stores, Wiltshire and Oxfordshire
The Company has acquired two modern foodstores in Swindon and
Bicester, comprising 9,548 sq ft and 7,142 sq ft. Both properties
are let to the Co-op with 17 years unexpired until first break,
with five yearly rental uplifts in line with RPI inflation, subject
to a collar of 2% pa and a cap of 3.5% pa.
The properties comprise the foremost convenience shopping
provision in densely populated residential areas, with strong
underlying land values, and trade very strongly.
Simon Lee, Partner, LXI REIT Advisors commented :
"Our focus on smaller lot-sized forward fundings and
relationship driven deals with developers and tenants has ensured
attractive entry pricing for these assets, despite them being in a
much sought-after sector where the investment market is becoming
increasingly competitive.
We continue to believe that right-sized, well positioned grocery
real estate assets let on sustainable rents to financially robust
tenants, who are benefitting from flexible and proven operating
models, and offering us as landlords very long, index linked, lease
terms, remain attractive investments. Following these acquisitions,
foodstores will be our largest sector exposure representing
approximately 25% of our portfolio by value."
FOR FURTHER INFORMATION, PLEASE CONTACT:
LXI REIT Advisors Limited Via Maitland/AMO
Simon Lee (Partner, Fund Manager)
John White (Partner, Fund Manager)
Peel Hunt LLP
Luke Simpson/Liz Yong 020 7418 8900
---------------------------------
J efferies International
Ed Matthews/Tom Yeadon 020 7029 8000
---------------------------------
Maitland/AMO (Communications Adviser) 07747 113 930
James Benjamin lxireit-maitland@maitland.co.uk
---------------------------------
The Company's LEI is: 2138008YZGXOKAXQVI45
NOTES:
LXI REIT plc invests in UK commercial property assets let, or
pre-let, on very long (typically 20 to 30 years to expiry or first
break), inflation-linked leases to a wide range of strong tenant
covenants across a diverse range of robust property sectors.
The Company may invest in fixed-price forward funded
developments, provided they are pre-let to an acceptable tenant and
full planning permission is in place. The Company will not
undertake any direct development activity nor assume direct
development risk.
The Company is targeting an annual dividend of 6.0 pence per
ordinary share for the 12-months commencing 1 April 2021*.
The Company, a real estate investment trust ( " REIT " )
incorporated in England and Wales, is listed on the premium listing
segment of the Official List of the UK Listing Authority and was
admitted to trading on the main market for listed securities of the
London Stock Exchange in February 2017.
The Company is a constituent of the FTSE 250, FTSE EPRA/NAREIT
and MSCI indices.
Further information on the Company is available at
www.lxireit.com
* These are guidance levels or targets only and not a profit
forecast and there can be no assurance that they will be met.
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