LXi REIT sets new 5.5p dividend target – LXi REIT has published its first set of accounts – covering the period from its launch on 21 December 2016 to 31 March 2018. The EPRA NAV per share increased by 9.87% to 107.67 pence (at the IPO in February 2017 it was 98.00 pence). Other highlights were:
- Raised total gross proceeds of GBP198.35 million during the period, GBP138.15 million at IPO in February 2017 and GBP60.20 million in a further placement of new shares in October 2017
- A low loan to value (‘LTV’) ratio of 30%, 500 bps below their maximum LTV at IPO of 35%
- Aggregate average all-in debt cost across the portfolio of 2.90% pa, fully fixed for the 11.3 years remaining loan term (expiring July 2029)
- A low total expense ratio of 1.14%, being operating expenses and management fees as a percentage of NAV
- 96% is index-linked or contains fixed rental uplifts
- A contracted annual rent roll of GBP16.98 million, including pre-let forward funded properties
- The annual dividend target for the year ending 31 March 2019 was increased 10% to 5.50 pence per share* from the 5.00 pence set at IPO
- Dividend fully covered by EPRA and adjusted earnings per share
- EPRA earnings per share of 4.20 pence for the period
- Adjusted earnings per share of 5.12 pence for the period
- An increased annual dividend per share target for the period of 4.00 pence, representing a 33.33% increase on the 3.00 pence target set at IPO:
- Portfolio independently valued at GBP278.92 million across 84 assets against portfolio costs of GBP255.47 million, representing a 9.18% increase
- Total return for the period of 11.91%, comprising the increase in NAV since IPO and dividends paid in the period
- Attractive average acquisition net initial yield (‘NIY’) of 6.03%, against a blended valuation NIY of 5.37% and average fixed cost of debt of 2.90% pa
- 96% of the contracted rental income is index-linked or contains fixed uplifts
- The rental income is secured against 25 strong tenants, including Aldi, Costa Coffee, General Electric, Home Bargains, Lidl, Motorpoint, Mears Group plc, Premier Inn, The Priory Group, Prime Life, Q-Park, QHotels, SIG, Specialist Housing Associations, Starbucks, Stobart Group and Travelodge
- Assets are broadly diversified across nine different defensive and robust sectors: hotels (23%), care homes (22%), supported living (21%), industrial (9%), student (7%), car parks (7%), discount retail (6%), leisure (3%) and automotive (2%)
- 100% of the portfolio is let or pre-let
- 87 properties with significant geographic diversification across the UK, of which three had exchanged but not completed at the period end
- Long weighted average unexpired lease term (‘WAULT’) to first break of 24.4 years
- The properties have been acquired via 34 separate purchase transactions, with an average lot size of GBP8 million and a good mix of pre-let forward funded, forward committed and built asset structures
- 84% of acquisitions have been ‘off-market’
- Achieved practical completion on one forward funded and two forward commitment development projects and on schedule with a further five forward funded and two forward committed projects in the course of development
- Equity and debt proceeds fully deployed (totalling GBP272.80 million (excluding acquisition costs) including forward funded commitments
Post period end highlights
- Achieved practical completion on the forward funded asset pre-let to GE Oil & Gas in Cramlington
- Proposed final dividend for the Period of 2.00 pence per share due to be paid on 2 July 2018, bringing the total dividends per share to 4.00 pence, in line with our increased dividend target for the Period
- Progressive annual dividend target set for the year ending 31 March 2019 of 5.50 pence per share
- 55% of contracted income, by rental value, to experience fixed or index-linked rent reviews in the year ending 31 March 2019
Stephen Hubbard, Chairman of LXi REIT plc commented: “The Group’s performance in its maiden annual period has been strong, meeting, and in many areas exceeding, our targets at the time of the Company’s IPO. The Board believes that, with a backdrop of continuing economic and geopolitical uncertainty, the Group’s portfolio is resilient and increasingly attractive to investors seeking stable income and capital growth. The Company offers investors a secure, diversified and growing index-linked income stream as well as attractive capital appreciation from our long-let, high quality and robust portfolio across defensive sectors with strong tenant covenants.
Despite a rising interest rate environment, there remains, and we expect there to continue to be, a very significant and positive spread between the Company’s index-linked portfolio yield and bond rates. Furthermore, the Board remains confident about delivering further value to our shareholders through the Investment Advisor’s strategies of acquiring selectively across a wide range of robust sectors on an ‘off-market’ basis and forward funding pre-let developments in smaller lot sizes.”
LXI : LXi REIT sets new 5.5p dividend target