Accretive Acquisitions and Profitable Disposals
26 April 2019
LXI REIT plc
(the "Company" or "LXI REIT")
ACCRETIVE ACQUISITIONS AND PROFITABLE DISPOSALS
The Board of LXi REIT plc (ticker: LXI), the specialist inflation-protected very long income REIT, is pleased to announce the following accretive acquisitions and profitable disposals.
Acquisitions
The Company has acquired a garden centre (the "Garden Centre") and a gym for a combined purchase price of £17.1 million, reflecting a 5.6% blended net initial yield (net of acquisition costs to the Company), as detailed further below.
Garden Centre
The Garden Centre has been acquired, by way of purchase and leaseback, with a new, unbroken 30-year lease in place to Dobbies Garden Centres Limited, with a guarantee from its parent Dobbies Garden Centres Group Limited, the UK's leading garden centre retail business with 69 centres across the UK and a business that is over 150 years old.
The new lease benefits from annual Retail Prices Index linked rent reviews (collared at 1% per annum and capped at 4% per annum compound).
The property is a modern garden centre, with an extensive range of buildings across a large 18-acre site, along with 500 parking spaces. It is well located in the Northumberland market town of Morpeth, within a mile of the A1, and is being acquired at a low capital cost and low rental base, with a high vacant possession value.
Gym
The Company has exchanged contracts to forward purchase a new gym facility in Andover, which has been fully pre-let to Pure Gym Limited, the UK's largest gym operator with over one million members and 230 gyms, on a new, unbroken 15-year lease, with five yearly fixed rental uplifts.
The property, which will comprise a brand-new gym facility of 15,000 sq ft, is strategically situated south of the A303, approximately 1.8 miles west of Andover town centre. Andover is located in the county of Hampshire, approximately 13.5 miles northwest of the city of Winchester.
The acquisitions have been funded through the disposals referred to below.
Disposals
The Company has sold a portfolio of social housing assets for £14.05 million, in aggregate, to a social housing specialist:
· generating an attractive geared IRR for the Company of 19.1% per annum;
· reflecting an exit yield of 5.3%, which compares favourably to the acquisition yield of 6.0% paid by the Company; and
· equalling the latest independent valuation yield of the assets.
Portfolio Overview
The Company's highly diversified, secure, long-dated and index-linked portfolio is now positioned as follows:
· Attractive average net initial property yield of 5.80%
· Long weighted average unexpired lease term to first break of 22 years
· 100% let or pre-let, with 96% of the income benefiting from inflation-linked or fixed uplift rent reviews: 62% RPI, 25% CPI, 9% fixed and 4% open market
· Long average debt maturity of 12 years at a low average fixed cost of 2.94% per annum
· Nine robust property sectors: hotels (28%), industrial (25%), healthcare (19%), discount foodstores (10%), leisure (8%), student (4%), car park (3%), office (1%) and automotive (1%)
· 38 robust tenants, including Aldi, BCA, Bupa, Costa, GE, Johnson Matthey, Lidl, National Express Group, Premier Inn, Q-Park, Starbucks, Travelodge and Whitbread
FOR FURTHER INFORMATION, PLEASE CONTACT:
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LXI REIT Advisors Limited John White (Partner, Fund Manager) Simon Lee (Partner, Fund Manager) |
Via Maitland/AMO |
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Peel Hunt LLP Luke Simpson |
Tel: 020 7418 8900 |
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Maitland/AMO (Communications Adviser) James Benjamin |
Tel: 020 7379 5151 |
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 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 5.50 pence per ordinary share, starting from the financial period commencing 1 April 2018, with the potential to grow the dividend in absolute terms through upward-only inflation-protected long-term lease agreements, and is targeting a net total shareholder return of a minimum of 8 per cent. plus per annum over the medium term.*
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 EPRA/NAREIT index.
Further information on the Company is available at www.lxireit.com
* These are targets only and not a profit forecast and there can be no assurance that they will be met.
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