LXi REIT inks €93m UK acquisitions

UK long income fund LXi REIT has inked three deals in England and Scotland worth £80 mln in total, and announced the successful sale of a Lidl foodstore in Somerset.

The latest acquisitions include a Life Science and Biotech campus in York, comprising 382,000 ft2 (35, 480 m2) of facilities across an 82 acre campus.

Fully let to Capita on a long lease with 25 years unexpired to first break, the campus is the place of work for 1,000 people.

The rent increases on a five-yearly basis in line with RPI inflation, capped at 3.5% p.a. Capita is listed on the London Stock Exchange, with a market cap of £840 mln.

75% of the underlying income at the campus is derived from UK Government agencies, with the remainder derived from high-growth SMEs. As such, the rent is underpinned by the current operational tenants, who include the Department for Environment, Food & Rural Affairs (DEFRA), Public Health England (PHE) and The Animal and Plant Health Agency (APHA).

The current rent is a very low £7.50 per ft2 and is highly reversionary relative to the ERV of c. £13.50 per ft2, according to LXi.

LXi also acquired STV's media studios and HQ in Pacific Quay, Glasgow. The purpose-built studios comprise 63,000 ft2 over four floors, along with 150 car parking spaces.

It contains all of STV’s live news studios, along with editing and data storage and processing facilities. The property remained open throughout the pandemic. STV have signed a new, unbroken lease for the premises, with a rent of £16.25 per ft2 which increases five yearly at a rate of 1.5% p.a.

The company's third deal is a waste recycling and storage facility in Aberdeen. It is let to Biffa plc on a long lease with 14 years unexpired to first break. The rent increases on an annual basis in line with CPI inflation, with a collar of 2% p.a. and a cap of 4% p.a.

The facility is Biffa’s only waste transfer site in Aberdeen and the company has commenced discussions with the tenant to increase the length of the lease.

The disposal announced by LXi comprises the sale of a Lidl Foodstore in Chard for £7.8 mln, reflecting a low exit yield of 3.8%. The sale price reflects a material premium of 38% to the acquisition price paid by the company and generates a geared IRR of 26% paa. The company acquired the property as a forward funding, at a 5.5% net initial yield, in 2017.

Simon Lee, partner, LXI REIT Advisors commented: 'These transactions demonstrate the company’s continuing ability to make accretive and secure long income investments across a wide range of structurally supported sub-sectors, including its first investment in the life science arena, as well as highly profitable disposals.'


Photo: Leslie Barrie / STV HQ & studios, Pacific Quay, Glasgow / CC BY-SA 2.0


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