LXi to forward-fund 13 drive-thrus
LXi REIT has exchanged contracts to forward-fund the prelet development of 13 Starbucks and Costa drive-thru coffee shops in a £23.4m deal.
The transaction reflects a 5.7% net initial yield. It will be funded through the company’s new Scottish Widows loan.
Of the properties, 12 were prelet to Starbucks and one to Costa, all on unbroken leases of 15 years from completion of the building works, along with five-yearly rent reviews index-linked to RPI inflation (collared at 1% pa and capped at 4% pa compound).
LXi REIT has exchanged contracts to forward-fund the prelet development of 13 Starbucks and Costa drive-thru coffee shops in a £23.4m deal.
The transaction reflects a 5.7% net initial yield. It will be funded through the company’s new Scottish Widows loan.
Of the properties, 12 were prelet to Starbucks and one to Costa, all on unbroken leases of 15 years from completion of the building works, along with five-yearly rent reviews index-linked to RPI inflation (collared at 1% pa and capped at 4% pa compound).
See also: The drive-thru boom
The sites are located in Barry, Blackpool, Cambourne, Canvey Island, Cardiff, Carmarthen, Newcastle Under Lyme, Northampton, Nottingham, Peterborough, Preston, Redditch and Stoke.
The REIT is not developing the sites or assuming development risk, and is forward-funding each property on a fixed-price basis.
Construction is expected to complete in Q3. The company will receive an income from the developer during the construction period.
Simon Lee, partner at LXI REIT Advisors, said: “This transaction provides our investors with rare access to the strong Starbucks and Costa covenants in scale and the individually granular lot sizes, forward funding structure and off-market nature of the purchase have delivered a highly attractive yield, coupled with RPI-linked rental uplifts and capital growth potential.”
To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette
