LXI REIT has acquired seven grocery stores for £85m, in the first step in deploying the proceeds of its £125m capital raise earlier this month.
The acquisitions comprise both pre-let forward fundings and built investments and have an average net initial yield of 5.25%.
Together, the assets have a long average unexpired lease term to first break of 19 years, with 100% of the income inflation-linked via contractual rental uplifts.
Around 70% of the net proceeds of the recent capital raise has now been deployed and the company has a number of other assets in solicitors’ hands which would fully deploy the balance of the proceeds of the capital raise and further announcements are expected to be made shortly.
The assets
- Lidl forward funding, Greater London
The company has exchanged contracts on the pre-let forward funding of a 20,000 sq ft foodstore in East Ham, Greater London, to be developed for and pre-let to Lidl on a 25 year lease from completion of the construction works, with a one-off break right at year 20. The rent will increase in line with RPI inflation on a five yearly basis subject to a 1% pa collar and 3% pa cap.
- Asda foodstore, Glasgow
The 50,000 sq ft foodstore in Glasgow was purpose-built for Asda and is let with 23 years unexpired to first break and contains RPI rental uplifts on a five yearly basis subject to a 4% pa cap and 0% pa collar.
The current rent is exceptionally low at £10 per sq ft and the store provides online connectivity through both home delivery and click and collect.
- Tesco foodstore, Greater London
The 40,000 sq ft foodstore in Bexley, Greater London is let to Tesco with 15 years unexpired to first break and RPI rental uplifts on a five yearly basis, with a cap of 3.5% pa and collar of 0% pa.
- Aldi foodstore and Home Bargains, Denbighshire
The company has acquired a 19,000 sq ft Aldi foodstore and adjoining 15,000 sq ft Home Bargains in Llangollen, Denbighshire. The property benefits from an overriding lease of the whole of both units to Sainsbury’s Supermarkets Limited, with just under 20 years unexpired on the lease to first break and RPI rental uplifts on a five yearly basis, collared at 1% pa and capped at 3.5% pa. Aldi and Home Bargains occupy by virtue of 20 year and 15 year, RPI-linked subleases.
The Aldi and Home Bargains units trade very well and the investment benefits from the double layer of Sainsbury’s and Aldi/Home Bargains covenants.
- Co-op convenience store and petrol station forward funding, Leicestershire
The company has exchanged contracts on the pre-let forward funding of a 4,500 sq ft convenience foodstore and petrol filling station in Ellistown, Leicestershire, to be developed for and pre-let to the Co-op on an unbroken 20 year lease from completion of construction works. The rent will increase in line with CPI inflation on a five yearly basis, subject to a 4% pa cap and 1% pa collar.
- Co-op convenience stores, Wiltshire and Oxfordshire
The company has acquired two foodstores in Swindon and Bicester, comprising 9,548 sq ft and 7,142 sq ft. Both properties are let to the Co-op with 17 years unexpired until first break, with five yearly rental uplifts in line with RPI inflation, subject to a collar of 2% pa and a cap of 3.5% pa.
LXI : LXI REIT buys seven foodstores for £85m