LXi REIT exchanges on UK portfolio

By James Buckley - Monday, February 12, 2018 8:53

LXi REIT has exchanged contracts on the acquisition of the freehold interest in a portfolio of regulated long-let supported living properties located in Colchester, Essex (74%), Birmingham (17%) and Dover, Kent (9%), paying £6.2m, reflecting a net initial yield of 6%.

Each property is immediately income producing and has been let on a new 25-year lease, with no tenant break, to a specialist Housing Association, which is a Registered Provider of social housing. The Registered Provider is regulated by the Regulator of Social Housing 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 and the Registered Provider is responsible for the costs of repair, maintenance, insurance and outgoings.

The properties in the portfolio comprise specialist, supported living homes for individuals with physical and/or mental disabilities or other care needs.

The acquisition is being funded using the proceeds of the company's new 11.5-year loan facility secured from Scottish Widows in December 2017 at a fixed rate of 2.85% per annum.

The company has now fully deployed its net equity and debt capital, totalling £273m. Across the company's portfolio, the headline statistics are:

-Long weighted average unexpired lease term to first break of 24 years

-6.03% average Net Initial Property Yield

-313 bps spread between the 6.03% Net Initial Property Yield and the Company's 2.90% per annum fully fixed average cost of debt

-Average debt maturity of 11.5 years

-91% index-linked rent reviews, 6% fixed rental uplifts and 3% open market rent reviews.

-88 properties, with significant geographic diversification across the United Kingdom

-100% let or pre-let

-25 strong tenants, including Aldi, Costa Coffee, General Electric, Home Bargains, Lidl, Motorpoint, Mears Group, Premier Inn, The Priory Group, Prime Life, Q-Park, QHotels, SIG, Specialist Housing Associations, Starbucks, Stobart Group and Travelodge

-Nine robust property sectors: supported living (24%), hotels (23%), care homes (19%), industrial (9%), student (7%), car parks (7%), discount retail (6%), leisure (3%) and automotive (2%)

-Good mix of forward funding, forward commitment and built asset structures 

Simon Lee, Partner of LXi REIT Advisors Limited, said: "The company has continued to perform strongly since its IPO in February 2017, effectively delivering on our stated objectives and in many areas surpassing our original expectations. The company's secure, diversified and growing index-linked income stream as well as attractive capital appreciation from across our long-let portfolio is delivering attractive returns to our shareholders.

“We are well placed with an excellent platform for growth and we look forward to driving further value for our shareholders throughout this financial year and for the long term."

jbuckley@costar.co.uk

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