LXi REIT (LXI) has acquired a Sainsbury’s supermarket in Middlesbrough for £58.9m. The purchase of the asset will be satisfied through the issue of just over 35.7m new shares in the company at 145p and a further £7m in cash.
The seller, Laxmi Nivaria, is an existing long-term shareholder of the company and has agreed to a lock-up period restricting the disposal of the shares for a minimum of 12 months.
The purchase price represents a net initial yield of 4.9%, which is expected to rise to 5.7% at the next inflation-linked rent review in 2025.
The property
Comprising 127,000 sq ft of built area, along with 850 car parking spaces and petrol filling station, the property is fully let to Sainsbury’s Supermarkets Limited with 19 years unexpired to first break. The rent increases five yearly in line with RPI inflation, collared at 1% per annum and capped at 4% per annum.
The property includes an Argos (part of the Sainsbury’s group), while part is sub-let to The Food Warehouse (part of the Iceland Foods group), B&M, KFC and Costa. The property has online connectivity through both click and collect and home delivery.
LXI said the property provides good opportunities for asset management and ESG initiatives that have the potential to enhance income and capital returns through adding further drive-thru units, EV charging points and solar panelling.
Simon Lee, fund manager, said: “We are pleased to acquire this well-let asset underpinned by a long, inflation-linked lease to a FTSE 100 company, with good asset management opportunities to enhance income and capital returns. The consideration predominantly takes the form of the issue of new shares in the company at a material premium to NAV, which further enhances the accretive nature of the transaction.”
LXI : LXI REIT swoops for £58.9m Sainsbury’s supermarket