LXi invests more in care homes and supported living properties – LXi REIT has announced the acquisition of two separate portfolios of care homes and supported living properties for a total consideration of GBP30.3 million.
Each of the portfolio acquisitions 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.
Acquisition of 31-year let care home portfolio for GBP28.5 million at 6.5% NIY
LXi has acquired the freehold interest in five modern, purpose-built care homes in Leicestershire and Lincolnshire for a total consideration of GBP28.5 million, reflecting a net initial yield of 6.5% (net of acquisition costs).
Each of these properties, benefiting from very high occupancy levels, is fully let to Prime Life, an established Care Quality Commission-regulated care operator which provides specialist facilities and services for elderly care, high dependency dementia and also for younger residents with learning disabilities, mental illnesses and physical disabilities. Prime Life is a family-owned business, with over 30 years’ experience and currently operates over 1,800 beds across 60 homes in the UK.
The leases are immediately income producing and have an unexpired term of 31 years (expiring November 2048), without a break, and are subject to annual upward-only reviews index-linked to the Retail Prices Index (collared and capped at 2% p.a. and 3.5% p.a. compound).
Acquisition of 25-year let supported living portfolio for GBP1.8 million at 6.0% NIY
LXI has also completed the acquisition of the freehold interest in a portfolio of regulated long-let supported living properties located in Lancashire and Yorkshire. The purchase price for the portfolio is GBP1.8 million, reflecting a net initial yield of 6.0% (net of acquisition costs).
Each property is immediately income producing and has been let on a new 25-year lease, with no tenant break, to a specialist Registered Provider of social housing. The Registered Provider is regulated by the Homes and Communities Agency and receives its funding for the rent payments directly from the relevant local authority.
Each lease is subject to annual upward-only rent reviews index-linked to the Consumer Prices Index and the Registered Provider is responsible for the costs of repair, maintenance, insurance and outgoings.
LXi has now completed the acquisition of the GBP18.9 million 35-year let supported living portfolio, the exchange of which was announced on 16 October.
Simon Lee, Partner of LXi REIT Advisors Limited, commented: “The company has now deployed 92% of the net proceeds of its second issue of shares announced on 12 October 2017 and we are in solicitors’ hands on further acquisitions which will fully absorb the outstanding balance of the fundraise in the next few weeks. Since the company’s IPO on 27 February 2017, the Company has deployed a total of GBP234 million of equity and debt capital across 29 acquisitions at an average net initial yield of 6.0% and with a weighted average unexpired lease term to first break of over 24 years.”
LXI : LXi invests more in care homes and supported living properties