TIDMLXI
RNS Number : 5614O
LXI REIT PLC
11 October 2021
11 October 2021
LXi REIT plc
(the "Company", the "Group" or " LXi REIT ")
PORTFOLIO VALUATION AT 30 SEPTEMBER 2021
RENT COLLECTION
PORTFOLIO UPDATE
LXi REIT (ticker: LXI), the specialist inflation-protected long
income REIT, is pleased to provide the following update ahead of
the Company's half-year results to 30 September 2021, which are
expected to be published in late November 2021.
Portfolio valuation
The Company's independent valuer, Knight Frank LLP, has valued
the Group's property portfolio, as at 30 September 2021, at GBP1.22
billion.
This represents a +4.9% like-for-like increase over the
six-month period since 31 March 2021 and a total increase of +29.7%
over that period, including acquisitions and disposals.
The like-for-like movements, resulting from both yield
compression and rental growth, were spread across the Company's
main sub-sectors as follows: Foodstores +5%, Industrial +7%, Budget
Hotels +2%, Healthcare +3%, Pubs +7%, Garden Centres +4%, Car Parks
+3% and Drive-thru Coffee +2%.
Net asset value and total return
On the basis of the updated property valuation, the Board
expects to announce a net asset value ("NAV") per share as at 30
September 2021, of approximately 133.5 pence, reflecting growth of
approximately +6.2% over the six-month period.
Inclusive of dividends paid during the six-month period, the
Company expects to deliver a total NAV return of approximately
+8.6% for the half-year, significantly outperforming the Company's
minimum annual total NAV return target of 8%(3) .
The Company's total NAV return from IPO in February 2017 to 30
September 2021 is expected to be 59%, equating to a 10.6%
compounded annual total NAV return.
The Company's total shareholder return since IPO, assuming
dividends reinvested was 70%, equating to a 12.3% compounded annual
total shareholder return.
Rental growth
The Group achieved an attractive average rental growth level of
2.9% per annum on assets which were reviewed during the six-month
period from 1 April 2021. (Further details on the portfolio rent
review terms are set out below.)
Rent collection
The Company is pleased to report that it has collected 100% of
the rent due for Q4 2021.
Portfolio statistics
The following is a high-level summary of the Company's portfolio
as at 30 September 2021(2) :
-- 171 properties, 100% let or pre-let to over 70 strong tenants at sustainable levels of rent
-- 23-year weighed average unexpired lease term to first break
-- 96% of the rental income is linked directly to inflation or
contains fixed uplifts: 58% RPI, 17% CPI and 21% fixed uplifts
-- All leases require full repairing and insuring by the
tenants, protecting the Group from property cost leakage and capex
requirements
-- Diversified across more than 10 robust property sectors as
follows, with the percentages illustrating the weighting of the
Group's portfolio by annual rent:
o Foodstores and essentials 20%
o Industrial 19%
o Budget Hotels 16%
o Healthcare 10%
o Car Parks 6%
o Garden Centres 5%
o Life Sciences 5%
o Drive-thru Coffee 4%
o Pubs 4%
o Education 3%
o Other 8%
Portfolio composition
The Group has fully and swiftly deployed the net equity raised
in both the March and July 2021 oversubscribed capital raises, at
an accretive 5.23% average net initial yield. This includes
investments in new structurally supported subsectors such as Life
Sciences (5%) and Education (3%), both of which benefit from
attractive supply and demand fundamentals, robust long-term
prospects for growth in ERVs, and on an asset level, strong rent
covers, long indexed-linked leases, market leading tenant operators
with strong covenants, and good locations with specialist
facilities.
The Group's pro-forma loan to value ("LTV") ratio at 30
September 2021 was approximately 26%, adjusting for completion of
forward fundings and assets for which contracts to acquire had
exchanged but not completed. As such, the Company expects to extend
its low cost (1.55% margin) revolving credit facility to fund the
balance of its pipeline with a view to reaching its targeted 30%
LTV ratio level in the near term, with headroom to the Group's
medium-term target maximum LTV ratio of 35% as well as the LTV
financial covenant that is 50%.
In order to continue to optimise the portfolio's performance,
the Company has continued to sell assets when it believes this will
help increase shareholder returns. During the period, the Company
sold a Lidl foodstore in Somerset at a low exit yield of 3.85%,
reflecting a 38% premium to acquisition cost and generating an
attractive geared IRR of 26% per annum.
Outlook
The Company has established a substantial and robust long income
portfolio diversified across resilient sectors and tenants, with
virtually all rental income linked to inflation or containing fixed
uplifts. As such, the Company expects to benefit from the current
higher inflationary environment and to continue to deliver
attractive income and capital returns for its shareholders.
The Company is targeting an annual dividend of 6.0 pence per
ordinary share for the 12-months commencing 1 April 2021(3) ,
payable in equal quarterly instalments of 1.50 pence per share.
This equates to a 4.5% yield on the expected NAV.
NOTES:
LXI REIT plc invests in UK commercial property assets let, or
pre-let, on long-term, triple-net, inflation-linked leases to a
wide range of strong tenant covenants across a diverse range of
robust property sectors.
The Company aims to provide shareholders with an attractive
return, in the form of quarterly income distributions and with the
potential for capital and income growth from key strategies which
include indexed rental uplifts, pre-let forward fundings, sale and
leasebacks, and off-market, value driven acquisitions and
sales.
The Company is targeting an annual dividend of 6.0 pence per
ordinary share for the 12-months commencing 1 April 2021(3) and its
medium-term total return target is a minimum of 8% pa.
The Company, a real estate investment trust ("REIT")
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.
The Company is a constituent of the FTSE 250, FTSE EPRA/NAREIT
and MSCI indices.
Further information on the Company is available at
www.lxireit.com
The Company's LEI is: 2138008YZGXOKAXQVI45
1 The expected net asset value range is stated after deducting
the dividend payable in respect of the quarter ended 30 June 2021
of 1.5 pence per share, which is expected to be paid to
shareholders on or around 29 October 2021 and went ex-dividend on
30 September 2021.
2 The portfolio statistics include assets that had exchanged but
not completed as at 30 September 2021.
3 These are guidance levels or targets only and not a profit
forecast and there can be no assurance that they will be met.
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END
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