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LXi REIT Closes GBP 135m of Acquisitions.

M2 EQUITYBITES-June 27, 2019-LXi REIT Closes GBP 135m of Acquisitions

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27 June 2019 - UK-based specialist very long income REIT LXi REIT plc (LSE: LXI) has recently closed acquisitions, for a combined total investment of approximately GBP 135m (USD 171.30m), which reflects a weighted average net initial acquisition yield of 5.7% (net of acquisition costs), the company said.

The acquisitions, which have been made individually from separate vendors and developers and include both pre-let forward fundings and built assets, comprise the following long-let and index-linked assets.

The company is also in legals on a number of additional assets to deploy the balance of the proceeds of the capital raise, with further acquisition announcements expected to be made shortly.

LXi REIT has acquired, by way of a pre-let forward funding, a new Aldi-led scheme in St Albans, Hertfordshire. The foodstore has been pre-let to Aldi Stores Ltd., the principal UK trading company of the Aldi group, on a new, unbroken 25-year lease with five yearly rental uplifts fixed at 2% per annum compounded.

Aldi is a discount supermarket, operating 10,000 foodstores across 20 countries.

LXi REIT has acquired, by way of a pre-let forward funding, a new 78-bedroom Travelodge hotel and Costa Coffee shop in Workington, Cumbria.

The hotel has been pre-let on a new, unbroken 25-year lease to Travelodge Hotels Ltd., the principal trading company of the Travelodge group, and the coffee shop has been pre-let to Costa Ltd., the principal trading company of the Costa Coffee group, on a new, unbroken 15-year lease. Both leases benefit from five yearly rent reviews index-linked to the Retail Prices Index.

Travelodge is a budget hotel operator, with over 40,000 bedrooms across more than 560 hotels in the UK, Ireland and Spain.

Costa is the UK's largest and the world's second largest coffee shop chain with over 2,100 UK outlets and more than 1,280 in 31 overseas markets. The Coca-Cola company completed the acquisition of Costa Ltd. in early 2019.

The company is not developing the above two sites or assuming development risk and is forward funding each property on a fixed price basis. The company will receive an income from the developers during the construction periods.

LXi REIT has acquired, on a sale and leaseback basis, seven Q-Park car parks in strong city centre locations in London, Edinburgh, Glasgow, York, Manchester and Sheffield.

Each property has been leased back to Q-Park Ltd., with a guarantee from its parent Q-Park N.V., on new, unbroken, 35-year leases, with annual rent reviews index-linked to the Retail Prices Index.

Q-Park is one of Europe's leading car park operators, with over 880,000 parking spaces across 6,700 car parks in 10 European countries.

LXi REIT has acquired a 91,000 sq ft distribution facility on a 10-acre site in Cannock, Staffordshire, a strong West Midlands logistics location.

The property benefits from a new, unbroken 20-year lease to Eddie Stobart Ltd., with a guarantee from its parent ESLL Group Ltd., with five yearly rent reviews index-linked to the Retail Prices Index.

Eddie Stobart is a provider of end-to-end logistics services, including road transport, supply chain management, warehousing and distribution services.

LXi REIT has acquired 14 family-oriented, food-led public houses in Cheshire, Manchester, Lancashire, Yorkshire, Staffordshire, Newcastle and County Durham.

Each property has been let to Greene King plc, with 15-year unexpired and unbroken lease terms, with annual rent reviews to a fixed uplift of 2.5% per annum compounded.

LXi REIT has acquired, on a sale and leaseback basis, a garden centre in Pennine, West Yorkshire.

The property has been leased back to Dobbies Garden Centres Ltd., with a guarantee from its parent Dobbies Garden Centres Group Ltd., on a new, unbroken 30-year lease, with annual rent reviews index-linked to the Retail Prices Index.

Dobbies is a 150-year old, market-leading garden centre owner and operator.

LXi REIT 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 property sectors.

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Publication:M2 EquityBites (EQB)
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Date:Jun 27, 2019
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