LXi announces clutch of deals including supported living sale – LXi REIT has exchanged contracts to provide forward funding for the pre-let development of a Travelodge hotel at Gosport in Hampshire for GBP6.6 million, reflecting a 5.7% net initial yield. The 70 bedroom hotel has been fully pre-let to Travelodge Hotels Limited, the principal trading company of the Travelodge group, on a 25-year lease from completion of the building works (with no tenant break right), with five yearly rent reviews index-linked to CPI inflation (collared at 1% per annum and capped at 4% per annum compound). The property is on the High Street in the centre of Gosport in the county of Hampshire, approximately three miles south west of Portsmouth. Planning consent has been granted, the agreement for lease has exchanged and the funding is on a fixed price basis. The company will receive an income from the developer during the construction period. The building works are due to complete in Q4 2019.
Forward purchase of Lidl-anchored scheme, Andover
LXi will also exchanged contracts to forward purchase the pre-let development of a Lidl foodstore, along with drive-thru units for Starbucks and Greggs, at Andover in Hampshire for GBP8.05 million, reflecting a 5.5% net initial yield. The 22,432 sq ft store has been fully pre-let to Lidl UK GmbH, the principal UK trading company of 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), on a 25-year lease from completion of the building works (with a tenant break right at year 15), with five yearly fixed rental uplifts of 2% per annum compounded. The Starbucks unit has been pre-let on a 20-year lease with five yearly rent reviews index-linked to RPI inflation and the Greggs unit has been pre-let on a 15-year lease with five yearly rent reviews to open market value.
The property benefits from 176 parking spaces on a 3.5 acre site. It lies two miles to the east of Andover town centre, adjacent to the A3093 which connects directly to the A303 dual carriageway. Andover is situated in the county of Hampshire, occupying a strategic location in central southern England and is located on the A303, which links to the M3 and serves as one of the main routes connecting London and the West Country. The building works are due to complete in June 2019.
Acquisition of local government let office, Glasgow
A local government let office near Glasgow is being bought for GBP6.8 million, reflecting a 5.0% net initial yield. The property has been fully let to South Lanarkshire Council, a substantial local government authority, on a new, unbroken 20-year lease, with five yearly fixed rental uplifts of 2.5% per annum compound. The property is a modern, purpose-built local government office over a three-storey building, totalling 36,020 sq ft, comprising majority office space, along with a doctors’ surgery and job centre, together with 47 parking spaces. It is located in Cambuslang, a south east suburb of Glasgow, and is being acquired at a low capital cost per square foot and with a low rental base.
Acquisition of Pure Gym, Norwich
A new gym facility in Norwich for GBP2.5 million, reflecting a 6.0% net initial yield, fully let to Pure Gym Limited, the UK’s largest gym operator (with over one million members and 230 gyms) on a new, unbroken 15-year lease, with five yearly fixed rental uplifts of 2% per annum. The brand new gym facility of 13,750 sq ft sits on a 1.4 acre site and is located prominently on one of the main arterial routes close to Norwich city centre.
Supported living disposals
LXi has sold a portfolio of 11 supported living properties located in Lancashire, Yorkshire, Merseyside and Kent for GBP10.9 million in aggregate: — generating an attractive geared IRR of 19.4% per annum. The deal reflects an exit yield of 5.3% (bought at 6.0%). This portfolio has been sold to HLIF, a private social impact fund. HLIF’s AIFM, LJ Administration (UK) Limited, is also the LXi’s AIFM and is a related party of the company.
John White, partner of LXI REIT Advisors Limited, commented: “We are pleased to have completed these profitable disposals and accretive acquisitions. These new investments provide attractive income and growth potential, underpinned by long-term, index-linked leases and the strong covenants of Lidl, Travelodge, Pure Gym and local government. We are continuing to deploy the balance of our new Scottish Widows loan facility and are in solicitors’ hands on a range of further accretive pre-let forward funding investments.”
LXI : LXi announces clutch of deals including supported living sale
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