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LXB Retail planning significant capital return

LXB Retail has published figures for the six months ended 31 March 2015. It was a busy period for the company with a number of major deals announced within the portfolio. The net asset value climbed by 5.57p as the value of its property portfolio was marked up by £12.1m.

The company faces a continuation vote at the AGM on 27 May but, ahead of this, it plans to return 45p per share to investors and it plans to make another capital return once the sale of Rushden Lakes goes through in 2016.

The development programme continues, albeit behind where they wanted it to be because of planning delays. They are on-site now at all sites except Ayr and Truro, both of which are longer term projects but did receive planning permission in March, and in the coming twelve months they expect to: achieve practical completion of the forward funded investments at Banbury Gateway and Biggleswade Retail Park; reach a final position on the potential transaction with IKEA at Greenwich; and reach practical completion at Stafford Kingsmead, Stafford Riverside and at Sheppey. They say they will also be close to practical completion of Brocklebank Retail Park at Greenwich and the foodstore at Sutton. In addition, the remaining retail units at Sutton should be well advanced, although practical completion is not scheduled until late 2016.

The Rushden Lakes sale will add to the NAV and free up substantial capital to return to shareholders but they say they have recently received an unsolicited approach to acquire another investment which is currently being evaluated. The Board say any further releases of cash (from this or other such approaches) will primarily be considered as available for capital returns. Depending on the sums involved, that may be achieved either by use of the general authority to purchase own shares (renewal of which will be requested at the AGM) or through a more structured process.

The board plans to alter the management fee arrangements so that the NAV on which the fee is based is calculated on a pro-forma basis after an adjustment to add back any future capital returned to the extent that it was derived from forward funding transactions. The adjustment will cease to be made one month after the investment in question achieves practical completion, and to ensure good governance, the revised calculations of the Investment Manager’s fees will be reviewed by the Group’s auditors before they are paid. The reason for this is that the deal under consideration now would have the effect of taking an asset out of the NAV calculation well before the manager finished working to generate value for shareholders on it.

LXB Retail planning significant capital return

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