LXi REIT is looking to raise £125m in a proposed issue of new ordinary shares through a subsequent placing, open offer, offer for subscription and intermediaries offer under its share issuance programme.
The group will target the issue of 88,261,608 new shares at an issue price of 142 pence, representing a premium of 2.9% to the estimated NAV at 31 December 2021 (unaudited) of 139.5 pence and a discount of 6.8% to the closing price on 17 January 2022 of 152.4 pence.
Shareholders that qualify for the open offer will be on the basis of three new shares for every 25 existing shares. Qualifying shareholders will also be offered the opportunity to subscribe for new shares in addition to their open offer entitlement under an excess application facility.
Deployment plans
LXi’s investment advisor has identified a pipeline of assets worth around £272m. The pipeline assets have a long weighted average unexpired lease term (WAULT) of over 20 years, a blended net initial yield of 5.2% with 97% of the income index-linked or with fixed uplifts.
The group said that the assets are diversified across a range of sub-sectors, location and are leased to a range of institutional-grade tenants with strong financial covenants, with a good mix within the pipeline of built assets and forward funded structures. The group believes it could deploy the proceeds of the issue within three months.
The result of the issue is expected to be announced in early February 2022 and a full timetable will be published in the prospectus, due out later this week.
Stephen Hubbard, chairman, said: “This proposed subsequent issue will provide the capital to enable the company to capitalise in short order on its £272m near term pipeline of accretive assets. The pipeline will further enhance and diversify the company’s portfolio of properties and is available at an average net initial yield of approximately 5.2%, which is higher than the current portfolio valuation yield of 4.5%. The pipeline assets are diversified across a range of defensive and structurally supported sub-sectors and let to institutional-grade tenants with strong financial covenants on long term leases, 97% of which are indexed-linked or contain fixed uplifts.
“Our portfolio continues to perform strongly, benefiting from the embedded inflation linkage in our rents, and its exposure to attractive sub-sectors of the real estate market including grocery and industrial. Meanwhile our recent acquisitions have further diversified our portfolio, including into areas such as life sciences and education, and clearly demonstrate our ability to create additional value outperformance for shareholders by sourcing attractive off-market properties and forward funding opportunities.
“We expect the group’s portfolio to continue to deliver attractive, defensive inflation protected income returns and capital growth to our shareholders going forward.”
LXI : LXI REIT targeting £125m fund raise