LXi REIT has acquired an Aldi foodstore and a Dobbies garden centre for a total of £24m, as it continues to build its long-income portfolio.
The acquisitions, which were acquired off-market, have an average net initial yield of 5.45%, a long average unexpired lease term to first break of 29 years and 100% of the income is index-linked to RPI inflation through contractual rental uplifts.
The group said further acquisitions were expected to be announced shortly, as it spends the proceeds of its recent £125m equity raise.
Dobbies garden centre, Gloucester
The company has acquired an 8-acre, 122,000 sq ft garden centre in Gloucester, let to Dobbies, the UK’s largest garden centre operator and an existing tenant of the company. The lease has 35 years unexpired to first break and benefits from RPI rental uplifts, reviewed on an annual basis, with a collar of 1% per annum and a cap of 4% per annum.
The property also sells 3,000 items of Sainsbury’s grocery and household products, under the terms of a joint venture between Dobbies and Sainsbury’s, which has been rolled out recently across the Dobbies estate.
LXI said one of the key benefits of garden centres is their flexible planning consent, which permits the sale of a wide range of products, including food. Garden centres have been classified as essential retail and thus have continued to trade during the UK’s last two national lockdowns.
Aldi forward purchase, Glasgow
LXI has exchanged contracts on the forward purchase of a new 17,000 sq ft foodstore in Glasgow. The property is pre-let to Aldi on a new lease with 16 years unexpired until first break.
The rent will increase in line with RPI inflation on a five yearly basis, with a collar of 1% per annum and a cap of 2.5% per annum and the current rent equates to a low £14.80 per sq ft.
LXI : LXI REIT on the acquisition trail