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LXI REIT reports 18.2% NAV total return in annual results

210820 LXI York Biotech Campus LXI REIT

LXI REIT has reported a NAV total return of 18.2% in the year to 31 March 2022. The company, which is currently going through the process of a merger with Secure Income REIT, has delivered an annualised NAV total return of 11.2% per annum since its launch – comfortably ahead of its 8% per year target.

It posted a 13.4% uplift in EPRA net tangible assets (NTA) to 142.6p, predominantly driven by like for like portfolio value growth in the year of 10.5%. The portfolio of long let, index linked property is now worth £1,544.4m.

The growth was spread across sub-sectors, as follows:

  • Foodstores and essentials up 10.2%
  • Industrial assets up 18.5%
  • Hotels up 4.3%
  • Healthcare up 4.2%
  • Car parks up 3.4%
  • Drive-thru coffee up 9.2%
  • Pubs up 10.4%
  • Garden centres up 9.9%

Adjusted earnings per share was 7.0p, down slightly on the prior year, but still representing a dividend cover of 117%. Dividends paid and declared in respect of the year total 6p per share (31 March 2021: 5.55p), up 8.1% on the prior year.

The company raised gross equity proceeds of £354m in the year and fully deployed the proceeds into a pre-identified pipeline of accretive assets. Loan to value (LTV) ratio at the end of the year was 22%.

Operational highlights

The group acquired 65 separate properties during the year for a combined purchase price of £558.2m at an average net initial yield of 5.2%. The portfolio now comprises 193 separate properties and is spread across 11 sub-sectors, having entered two new sub-sectors during the year in education and life sciences and splitting out garden centres into a separate sector.

The portfolio is 100% let, or pre-let, to more than 70 separate tenants, on full repairing and insuring (FRI) leases. 96% of contracted rents contain upward only index-linked rent reviews or fixed uplifts, with 76% of contracted rent reviews containing either a collared or fixed uplift, averaging 2% per annum.

The portfolio weighted average unexpired lease term (WAULT) is 21 years to first break option.

The board has announced a target annual dividend of 6.3p per share for the financial year that commenced 1 April 2022, which represents a 5% increase over the 6.0p per share dividend target for the year ending 31 March 2022

Cyrus Ardalan, chairman of LXi REIT, commented: “This has been another transformational year for the Group, delivering increased scale and diversification, with £354m of new equity raised and fully invested, as well as a strong financial performance with an 18.2% total NAV return. 

“Geopolitical uncertainty, as well as the cost of living crisis and inflation, have meant that global markets remain volatile and interest rates continue to rise but I am comforted by the defensive and robust platform that the Group enjoys through its diversified long-let assets, high quality tenant operators and inflation-linked rents.

“My fellow Directors and I believe that the proposed merger with Secure Income REIT plc brings together two complementary long, inflation-linked portfolios whilst maintaining the conservative and highly attractive investment case that our shareholders have benefitted from since IPO as well as the defensive scale that will support the Group in navigating the existing uncertainty.”

The company announced the terms of a proposed merger with Secure Income REIT on 11 May 2022. The merger remains conditional on shareholders voting to approve the transaction with the vote expected to be held at a general meeting on 22 June 2022.

LXI : LXI REIT reports 18.2% NAV total return

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