LXi picks up seven grocers for £85m
Long-income investor LXi REIT has bought seven foodstore investments for a total of £85m.
The assets comprise both prelet forward fundings and built investments. The portfolio has an accretive average net yield of 5.25% and an average unexpired lease term to first break of 19 years.
The acquisitions have been funded with proceeds from LXi’s £125m capital raise earlier this month. Around 70% of that capital has now been spent and LXi said it had further acquisitions in its pipeline that would deploy the full proceeds of the raise.
Long-income investor LXi REIT has bought seven foodstore investments for a total of £85m.
The assets comprise both prelet forward fundings and built investments. The portfolio has an accretive average net yield of 5.25% and an average unexpired lease term to first break of 19 years.
The acquisitions have been funded with proceeds from LXi’s £125m capital raise earlier this month. Around 70% of that capital has now been spent and LXi said it had further acquisitions in its pipeline that would deploy the full proceeds of the raise.
Assets bought with this slug of cash include a 20,000 sq ft development in East Ham, Greater London, prelet to Lidl on a 25-year lease with a break at 20 years. Lidl’s rent will increase in line with RPI inflation on a five-yearly basis subject to a 1% pa collar and 3% pa cap.
In Glasgow, LXi has bought a 50,000 sq ft Asda. The existing investment is let to the supermarket chain for a further 23 years to its first break. It is let at £10 per sq ft with RPI rental uplifts on a five-yearly basis subject to a 4% pa cap and 0% pa collar.
In Bexley, the group has bought a 40,000 sq ft Tesco. It has 15 years unexpired to first break on its lease and RPI rental uplifts on a five-yearly basis, with a cap of 3.5% pa and collar of 0% pa, and benefits from 255 car parking spaces.
In Llangollen, Denbighshire, LXi has acquired a 19,000 sq ft Aldi and adjoining 15,000 sq ft Home Bargains. The two units benefit from an overriding lease to Sainsbury’s, which has just under 20 years unexpired. Aldi’s and Home Bargains’ subleases are for 20 and 15 years, respectively.
The final investments of the seven are three Co-ops in Leicestershire, Wiltshire and Oxfordshire. In Ellistown, Leicestershire, the business has exchanged contracts for the forward-funding of a 4,500 sq ft convenience store and petrol station, prelet to the Co-op on an unbroken 20-year lease, while in Wiltshire and Oxfordshire, LXi has bought two existing Co-ops in Swindon and Bicester, totalling 9,548 sq ft and 7,142 sq ft, respectively. Both are let to the Co-op with 17 years unexpired until first break.
Simon Lee, partner at LXi REIT Advisors, said: “Our focus on smaller lot-sized forward fundings and relationship-driven deals with developers and tenants has ensured attractive entry pricing for these assets, despite them being in a much sought-after sector where the investment market is becoming increasingly competitive.
“We continue to believe that right-sized, well positioned grocery real estate assets let on sustainable rents to financially robust tenants, who are benefitting from flexible and proven operating models, and offering us as landlords very long, index-linked lease terms remain attractive investments. Following these acquisitions, foodstores will be our largest sector exposure representing approximately 25% of our portfolio by value.”
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