LXI REIT has announced its intention to raise £75m through the issue of new shares.
The issue price of 133p per share reflects a 2.3% premium to the company’s estimated IFRS net asset value (NAV) of 130p at 1 June 2021 and a discount of 7.9% to its closing share price of 144.4p.
The proceeds of the raise will be used to acquire an identified pipeline of assets worth around £125m. These comprise two sale-and-leaseback portfolios in the education sector (a new sub-sector for the company), three pre-let supermarkets let to Lidl, Co-op and Sainsbury’s, and a forward-funding portfolio of drive-thru coffee assets.
The pipeline has an average net initial yield of 5.5%, a long WAULT to first break of over 25 years and benefits from rents which are all either inflation linked or contain fixed uplifts.
LXI raised £125m from a placing in March 2021 that was significantly oversubscribed from an original target of £75m. It deployed those proceeds in less than three months.
Stephen Hubbard, chairman, said: “This placing will enable the company to capitalise on a near term pipeline of sale and leaseback and other long income, forward funding opportunities. The properties in the pipeline are diversified across a range of defensive and structurally supported sub-sectors and let to high-quality tenant covenants.
“At a time when inflation concerns are rising, the value in our long leases with embedded indexation and strong property and covenant fundamentals is becoming clearer to all. We expect the portfolio to continue to deliver attractive and resilient returns to our shareholders going forward.”
The latest date for applications under the placing is 30 June and the results of the placing will be announced on 1 July.
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