LXi REIT has fully deployed the net proceeds of the £250 million capital raise with the new acquisitions worth £73 million.
The acquisitions, which have been transacted on an off-market basis, reflect an accretive 5.4% net initial yield (net of purchase costs), versus the current portfolio valuation yield of 4.5%.
The company has acquired a 73,000 sq ft foodstore in Halesowen, Birmingham. The property is fully let to Asda Stores Limited (the principal group company) on a long lease with 22 years unexpired to first break and benefits from five yearly rental uplifts at a fixed growth rate of 3% per annum compounded.
The dominant store, which includes 600 parking spaces and was built in 2008, trades strongly and benefits from a significant catchment population of 1.1 million residents within a 20-minute drive time.
Asda is the UK’s third largest grocer, operating 600 stores and serving 18 million customers a week.
Following its acquisition of the Compass Milton Keynes site announced on 14 February 2022, the company has acquired a second Compass training and conference facility extending to 127,000 sq ft, on a substantial 18.5 acre site, in Stone, Staffordshire.
The property is again fully let to Compass Group Holdings plc, a FTSE 100 constituent, with a market cap of approximately £30 billion, on a long lease with 17 years unexpired to first break.
The current rent equates to a low £12 per sq ft and reviews annually with a fixed uplift of 2.5% per annum compounded.
The property is well located and is underpinned by a strong residual and alternative use value, including for potential residential use, with the property surrounded by recently developed, modern housing.
According to the statement, following the full deployment of the proceeds of the £250 million capital raise, the portfolio is now positioned as follows:
· 191 properties which are 100% let or pre-let on long-term, triple-net leases to 70 strong tenants, with a long WAULT to first break of 22 years;
· 96% of the rental income is either inflation-linked (74%) or contains fixed uplifts (22%);
· The Company’s sub-sector weightings are: Foodstores and essentials (25%), Industrial and logistics (17%), Budget hotels (13%), Healthcare (8%), Car parks (5%), Life sciences (4%), Drive-thru coffee (4%), Garden centres (4%), Pubs (3%), Education (2%) and Other (15%).
