TIDMLXI
RNS Number : 4041B
LXI REIT PLC
10 June 2021
10 June 2021
LXi REIT plc
(the "Company", the "Group" or " LXi REIT ")
GBP19 MILLION FORWARD FUNDING INVESTMENT, PRE-LET FOR
35-YEARS
PROFITABLE DISPOSAL
ACCRETIVE LEASE RE-GEARS
EXPANSION OF LXI REIT ADVISORS' TEAM
The Board of LXi REIT (ticker: LXI), the specialist
inflation-protected long income REIT, is pleased to announce that
the Company has exchanged contracts on the forward funding
acquisition of a 94,000 sq ft garden centre in Reading (the
"Property") for a total cost of GBP19 million, reflecting an
accretive 5.3% net initial yield (net of acquisition costs).
The Property is pre-let to Dobbies, the UK's largest garden
centre operator and an existing tenant of the Company, on a new
35-year lease, with no break right, and benefits from CPI plus 1%
pa rental uplifts, reviewed on an annual basis, with a collar of
1.5% pa and a cap of 4% pa.
The rent has been set at a low and sustainable level which is
forecast to provide rent cover of at least two times (net income of
twice the rental level) and the Property is underpinned by a strong
residual value.
The substantial site, which extends to seven acres and will have
316 parking spaces, is well located in Shinfield, Reading, with a
large and affluent catchment population of 1.1 million people
within a 30-minute drive.
The Property will sell 3,000 items of Sainsbury's grocery and
household products, under the terms of a joint venture between
Dobbies and Sainsbury's, which has been rolled out recently across
the Dobbies estate and is proving to be extremely successful.
Dobbies provide online connectivity through both home delivery
and click & collect.
The Company is working with Dobbies to ensure that the
development, which will replace an existing small garden centre, is
built with sustainable materials, and that the Property
incorporates energy efficiency features such as solar panelling,
rainwater harvesting, air/ground source heat pumps, recycling/waste
management and EV charging points.
Construction works are scheduled to complete in spring 2022 and
the Company will earn an income during the construction period. The
development will be funded through utilising the Company's
revolving credit facility.
The Company will now own four long-let garden centres. One of
the key benefits of garden centres is their flexible planning
consent, which permits the sale of a wide range of products,
including food. Garden centres have been classified as essential
retail and thus have continued to trade during the UK's last two
national lockdowns.
This latest acquisition takes the Company's total funding
deployed/committed to GBP170 million since its GBP125 million
capital raise in March 2021, across 13 separate transactions in
structurally supported sectors (foodstores, industrial, drive-thru
coffee and garden centres), with a long weighted average unexpired
lease term to first break of 22 years and with 100% of the rent
roll being inflation-linked (86% to RPI, 11% to CPI+1 and 3% to
CPI).
Profitable disposal
The Company has sold a small, ancillary retail parade acquired
last year as part of the Co-op foodstore portfolio purchase.
The sale proceeds of GBP575,000 represent a 100% premium to the
purchase price paid by the Company and will be deployed into the
Company's accretive forward funding pipeline.
Accretive lease re-gears
The Company is pleased to report that it has proactively
completed the extension of the occupational lease terms on six
Greene King pubs (the "Re-geared Assets") from 13 years to expiry
to 20 years to expiry, without break, in return for a 10% reduction
in the passing rent.
The Re-geared Assets' rent represents 43% of the total rent of
the Company's pub assets.
Having discussed the matter with the Company's Valuer in
advance, it is anticipated that the re-gear will have a material
positive impact on the value of the Re-geared Assets, along with
providing the additional security of longer term cash flows with
annual contractual fixed rental uplifts of 2.5% pa.
Expansion of LXI REIT Advisors' team
The Company is pleased to announce that its Investment Advisor,
LXI REIT Advisors Limited, has made two appointments to further
strengthen its team.
Michael Maddox joins as Assistant Fund Manager and will work
closely with co-Fund Managers Simon Lee and John White. Michael
brings a wealth of long income property experience, having held key
roles at Aviva Investors and KFIM.
Charlotte Price joins as Financial Controller and will work
closely with CFO, Freddie Brooks. Charlotte trained and practised
in the audit team at BDO, where she gained significant experience
of UK REITs.
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 long-term, triple-net, inflation-linked leases to a
wide range of strong tenant covenants across a diverse range of
robust property sectors.
The Company aims to provide shareholders with an attractive
return, in the form of quarterly income distributions and with the
potential for capital and income growth from key strategies which
include indexed rental uplifts, pre-let forward fundings, sale and
leasebacks, and off-market, value driven acquisitions and
sales.
The Company is targeting an annual dividend of 6.0 pence per
ordinary share for the 12-months commencing 1 April 2021* and has
delivered an average total NAV return of 10.1% pa since IPO to 31
March 2021. The Group's medium-term total return target is a
minimum of 8% pa.
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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