Lxi Reit Share Discussion Threads

[skinny] 04/6/2020 15:45

"That doesn't read too badly to me" - that seems to be the initial consensus.

[spectoacc] 04/6/2020 15:21

Hmm. That doesn't read too badly to me, but - if the Travelodge CVA is agreed/goes through, what incentive does that give to other tenants to pay up? ie becomes their default negotiating position, and we all know the next qtr is likely to be the worst.

[skinny] 04/6/2020 15:09

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The Board of LXi REIT plc (ticker: LXI) notes that Travelodge Hotels Limited ("Travelodge") has filed proposals for a company voluntary arrangement ("CVA"), and provides the following information.

The Group owns 12 hotels let or pre-let to Travelodge, representing 10% of the annual contracted rents, including contracted rents under agreements for lease. Two of these hotels are under construction and benefit from cash-backed developer licence fees and a further two hotels are currently in developer funded rent free periods, reducing the current quarter's exposure to Travelodge to 8%.

Travelodge's proposed CVA, in combination with support from Travelodge's shareholders, is designed to provide cashflow assistance to Travelodge as a result of the impact of Covid-19.

The Board of Directors will scrutinise the proposals, along with our advisors, in order to best protect the Company's position in determining whether or not to support the CVA proposals. We will carefully consider all of the Company's options including the right to forfeit Travelodge's leases - a right which it retains. It is anticipated that the creditor vote will take place on 19 June 2020.

The impact on the Company's total annual contracted rent roll as a result of this Travelodge proposal (assuming the Company does not forfeit Travelodge's leases) would be:

· a reduction of 4.6% of the Group's annual contracted rent during the financial year ending March 2021;

· a reduction of 2.9% of the Group's annual contracted rent during the financial year ending March 2022; and

· a return to the full annual contracted rent due under the leases in the financial year ending March 2023.

Travelodge also proposes to provide landlords with a share of future revenues should certain hurdle rates be met, along with increasing the length of the leases.

Dividend guidance and update on March rent collection

The Travelodge CVA has no impact on the quarterly dividend guidance provided on 18 May 2020 of 1.30 pence per share. The Company's Investment Advisor has continued to progress discussions with tenants regarding payment of the March 2020 quarter date's rent and has now agreed repayment terms with virtually all tenants.

[nickrl] 19/5/2020 15:58

Specto im pretty sure HMT will be regretting some of there initial actions but they thought that petrol was about to be poured on a small fire so over reacted but we are where we are. What i thought would happen by now is HMT would be more targeting in its support measures but the furlough action last week suggests not although i believe they've yet to release full details so maybe it won't look as generous in due course.

Ultimately HMT must be acutely aware of the negative feedback into banks if the dominoes begin to tumble so this is why banks have been given the liquidity to prop up landlords and im surmising the expectation is banks will be expected to support refinancing with either extended terms at potentially lower rates.

Currently what the government does with rental enforcement action is key to which way the market goes (there will be outliers ie HMSO over last wk that wont follow the trend) but on 1-3yr horizon i can't see majority of propcos being a significant source of income.

[spectoacc] 19/5/2020 15:06

@nickrl - tricky isn't it. The govnt stop landlords taking enforcement action, but also taxpayer is paying for furlough & a full 12 months off business rates. Logic says landlords should also take a quarter or half year of no income, when there's no revenue being earned.

So no divis, fine - but what about the debt holders? The banks only have to defer it. Yet there's no way this rent will get "made up" later on, more the opposite - an extended period, as you say, of disrupted trading & income. Suddenly the landlords are taking most of the pain but with none of the relief.

Most so far appear sensible - moving to monthly rents, working with tenants. With the sole exception of the lamentable Travelodge and its short-term owners. Can't believe govnt really intended to pay PE's furlough costs/business rates, & have them stop paying rend. But then again - they gave the supermarkets about half a billion quid each.

[nickrl] 19/5/2020 14:44

Specto good to see some solidarity emerging amongst landlords as there could be tsunami of CVA's unleashed, especially if govt don't extend the restrictions over landlords commencing rental enforcement action, so we don't need them breaking ranks too easily. That said it would also be useful for the likes of BPF to promote with government a sector wide approach as to how they help those sectors who are going to facing a whole world of pain for 18mths+.

[spectoacc] 19/5/2020 10:05

All indications so far are that the other TL landlords feel exactly the same as LXI.

[winsome] 19/5/2020 09:26

Give TL a discount, then Premier Inn will rightly ask for one next quarter, joined by Greene King. If TL go the CVA route then I assume a discount will be enforced on LXI if other landlords reach consensus.

[winsome] 19/5/2020 09:22

Quality commercial property is one of the safest assets I can think of long term. I remember working in Salford late 80's during a big downturn with many newly built office blocks lying empty at the Quays. Seemed at the time they would remain that way. A few years later they were full.

[nickrl] 18/5/2020 14:43

Curious that with TL being there largest tenant at 10.4% of rent roll (£5m) they say nothing in the narrative about the situation.

They are presenting rental data as FY% but for March qtr its c73% now up from 67% (6/4) with a payment plan for most of its tenants being agreed but presumably the outlier is TL. TL have publicly declared they want 18 months at 80% or will pursue a CVA ok all posturing to a degree but without TL rent they wont be able to cover the dividend with the increased shareholder base from last years equity raise.

Theoretically the long leases should serve this company well but i wonder how many tenants will be back knocking on the door for renegotiation as the fallout continues to playout.

[spectoacc] 18/5/2020 11:13

Private Equity mob took tens of millions out of Travelodge - hope any threat to CVA gets the treatment it deserves. Doesn't help when govnt bans winding up orders - on smaller tenants, agreed, but Travelodge both took advantage of govnt schemes (eg Furlough), whilst simultaneously not paying landlords.

[winsome] 18/5/2020 10:09

I have sympathy for the smaller tenants in the market and think they should be accommodated by landlords in some way where needed but Travelodge have deep pockets, took a lot of money in pre-lockdown in non-refundable bookings and also continue to operate 50 of their hotels for key workers paid for by govt (I presume).

Budget hotels do well in poor times. Their request to reduce rent till end of 2021 is opportunistic. You cannot stop honouring your liabilities at times when you are making a loss. Otherwise capitalism collapses.

[spectoacc] 18/5/2020 09:09

Interesting article in the ST yesterday re Travelodge, and how a threatened CVA may not go so well for them.

But agreed re lockdowns - question is, does Covid re-emerge, and how long does the uncertainty last (& to a lesser extent - do people return to something resembling normality).

Thought their comment on the divi seemed fair.

[winsome] 18/5/2020 09:03

Results a bit reassuring this morning, which is the best we can say about anything these days. Let's hope pubs and hotels get to reopen as planned, maybe even sooner if UK starts to follow other EU country easing of lockdowns. Who'd have thought a few short weeks ago that Italy's bars and cafes, etc would be open today, and hotels and restaurants opening 3rd June?

Anyway, I expect there will be a hit on LXI's rental income in the medium term, with delayed rent catching up before year end. No doubt some tenants such as Travelodge may never pay full rent for the 1st quarter but that shouldn't hit the div to any degree. If TL don't play ball then LXI should evict them and rent to Premier Inn instead.

[redponza] 15/5/2020 12:28

So all the hotels in the portfolio are under Travelodge?
As Travelodge only wants to pay 20% of rent now, at worst case, LXI will lose 20% of rents （24% portfolio x 80% cut）, so a similar reduction in dividend?

Though insiders are buying at these levels, very interesting indeed

[skinny] 05/5/2020 07:23

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LXi REIT plc (ticker: LXI), the specialist inflation-protected very long income REIT, will announce its annual results for the year ended 31 March 2020 on Monday, 18 May 2020.

[spectoacc] 04/5/2020 07:36

Can't knock that. Be interesting to see what LXI buy in return, but Social Housing clearly still has demand.

[skinny] 04/5/2020 07:01

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LXi REIT plc (ticker: LXI), the specialist inflation-protected very long income REIT, is pleased to announce the following profitable disposal.

Following receipt of an unsolicited approach, the Company has sold two social housing assets for an aggregate price of £2.2 million to a specialist fund:

· reflecting a net exit yield of 5.15%, which compares favourably to the net acquisition yield of 6.0% paid by the Company in 2017;

· representing a 15% uplift on purchase price and a 3% premium to latest book value; and

· generating an attractive geared IRR for the Company of over 15% per annum.

The Company intends to redeploy the proceeds of the sale into its accretive asset pipeline once the impact of Covid-19 has become clearer.

[spectoacc] 20/4/2020 13:32

Travelodge have a cheek not paying last qtr end IMO - Premier Inn (WTB) paid up.

[gre] 20/4/2020 11:39

Worrying news this morning that Nick Leslau’s Secure Income REIT has begun legal action against the owners of Travelodge over unpaid rent. LXI has quite a few Travelodges in their portolio so I wonder if will they follow suit?

[spectoacc] 06/4/2020 07:33

Divi remains, but 67% of rent collected only. As with almost everyone else, the key question - how long does Covid-19 disruption last.

That 67% is with Premier Inn paying (see post above).

[jonwig] 06/4/2020 07:32

Trading update:



Reasonable, considering the circumstances.