LXi funds Lidl in Chard – LXi REIT has exchanged contracts to provide forward funding for the development of a new food store in Chard, Somerset, pre-let to Lidl UK GmbH. The development represents an investment of GBP5.5 million, reflecting a net initial yield of 5.75% (net of acquisition costs).
The property will comprise a 23,500 sq ft Lidl food store and 114 car parking spaces. Lidl UK, the tenant, is the principal UK trading company of the Schwarz Gruppe GmbH, a top four global retail group that owns and operates the Lidl and Kaufland brands, operating over 10,000 stores across 26 countries. Lidl UK has now overtaken Waitrose’s UK market share. The property will benefit from a new 25-year lease from completion of the building works with a tenant break right in year 15. The rent is subject to five yearly upward only reviews index-linked to the Retail Prices Index.
The property is well located on a prominent site in Chard, Somerset, close to the Devon border and approximately 15 miles south west of Yeovil. The site is well served by the national motorway network and has a large catchment population within a 10-minute drive.
The pre-let agreement with Lidl has exchanged and the company is acquiring the land and forward funding on a fixed-price basis, with completion of the purchase subject to receipt of planning consent. The developer will pay the company a licence fee during the construction period. LXi is not developing the site or assuming development risk.
The acquisition is being funded from equity resources following the second issue of shares on 12 October, with senior debt finance expected to be introduced in the near term.
John White, Partner of LXi REIT Advisors Limited, commented: “We are delighted to provide the forward funding for this new discount food store. Lidl is a very strong tenant in the UK’s fast-growing discount food sector and the acquisition reflects an attractive yield with a very low capital price of GBP230 per sq ft.”
LXI : LXi funds Lidl in Chard