LXi REIT fully deploys equity and debt

By Paul Norman - Friday, September 08, 2017 8:52

LXi REIT said this morning it had fully deployed its equity and debt as it confirmed the acquistion of the freehold interest in a portfolio of regulated long-let supported living properties located across England.

The purchase price for the portfolio is £12.9m, reflecting a net initial yield of 6% (net of acquisition costs to the company).

Each property is immediately income producing and has been let on a new 25-year lease, with no tenant break, to a specialist Registered Provider of social housing.

The Registered Provider is regulated by the Homes and Communities Agency and receives its funding for the rent payments directly from the relevant local authority.

Each lease is subject to annual upward-only rent reviews index-linked to the Consumer Prices Index (uncapped) and the Registered Provider is responsible for the costs of repair, maintenance, insurance and outgoings.

The company has also completed, at a 6.15% net initial yield, the forward funding acquisition of the property in Camborne, Cornwall, which has been pre-let to Travelodge, Costa and KFC, the exchange of which was announced by the Company on 24 July.

The acquisitions are being funded from the company’s Scottish Widows debt facility.

The company said it has now deployed all of the net proceeds of its £138m IPO and its £55m 12-year loan facility following listing on 27 February 2017.

Across the company’s assets, the average net initial yield is 5.94%, the weighted average unexpired lease term to first break is 24 years and 96% of the income is index-linked/has fixed uplifts.

The assets are diversified across eight different sectors: hotels (30%), supported living (23%), care homes (13%), industrial (11%), car parks (10%), discount retail (5%), restaurants and coffee shops (5%) and automotive (3%).

The income is secured against 17 tenants, including Aldi, Costa Coffee, General Electric, Home Bargains, Motorpoint, Premier Inn, The Priory Group, Q-Park, SIG, Specialist Housing Associations, Starbucks and Travelodge.

Simon Lee, partner of LXi REIT Advisors Limited, said: "We are very pleased with the Company’s strong progress since listing on 27 February 2017 and to have deployed our equity and debt in full in this period. LXi has invested into high quality assets with strong, secure covenants diversified by sector, tenant and geography with a 24 year WAULT and attractive income yield, meeting and in many areas exceeding our original expectations at our IPO.

"Coupled with our substantial investment pipeline of secure, long-let index-linked property assets, the Company is well positioned with an excellent platform to deliver attractive inflation-protected income and capital returns to our shareholders."

pnorman@costar.co.uk

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