LXi REIT has announced that it has completed the acquisition of the freehold interest in a portfolio of regulated long-let supported living properties located in Yorkshire. The purchase price for the Portfolio is £3.8 million, reflecting a net initial yield of 6.0% (net of acquisition costs to the Company). The company says that the properties in the Portfolio comprise specialist, high quality supported living homes for individuals with physical and/or mental disabilities or other care needs. The acquisition has been funded from equity resources, with senior debt finance expected to be introduced in the near term.
Immediate income generation
The company says that each property in the portfolio is immediately income producing and has been let on a new 25 year lease, with no tenant break, to a specialist Registered Provider of social housing. The Registered Provider is regulated by the Homes and Communities Agency and receives its funding for the rent payments directly from the relevant local authority.
Each lease is subject to annual upward-only rent reviews index-linked to the Consumer Price Index (uncapped) and the Registered Provider is responsible for the costs of repair, maintenance, insurance and outgoings.
Targeting minimum dividend of 5p per share
LXi REIT says that it is targeting a minimum annual dividend of 5 pence per ordinary share, starting from the financial period commencing 1 April 2018, with the potential to grow the dividend in absolute terms through upward-only inflation-protected long-term lease agreements, and is targeting a net total shareholder return of 8 per cent. plus per annum over the medium term.
About LXi REIT
LXi REIT is a real estate investment trust (REIT). It is incorporated in England and Wales, is listed on the premium listing segment of the Official List of the UK Listing Authority and was admitted to trading on the main market for listed securities of the London Stock Exchange in February 2017.
LXi REIT invests in UK commercial property assets let, or pre-let, on very long (typically 20 to 30 years to expiry or first break), inflation-linked leases to a wide range of strong tenant covenants across a diverse range of property sectors. The Company says that it may invest in fixed-price forward funded developments, provided they are pre-let to an acceptable tenant and full planning permission is in place but that it will not undertake any direct development activity nor assume direct development risk.
LXi REIT acquires Yorkshire supported living portfolio for £3.8m : LXI