Lxi Reit Share Discussion Threads

[skinny] 20/10/2020 08:28

As part of its ongoing plan to actively manage its portfolio, LXi REIT plc (ticker: LXI) is pleased to announce three profitable disposals for a total value of GBP17 million, and two accretive acquisitions in the foodstore sector, which are being acquired for a total sum of GBP15 million, reflecting an attractive blended net initial yield of 5.5% (net of acquisition costs).

Disposal of Glasgow office

The Company has sold its sole office, a long-let property in Cambuslang, Glasgow occupied by the local council, to a specialist REIT for GBP8 million, reflecting a low exit yield of 4.2%.

The disposal pricing reflects a premium of 17% to purchase price and generates an attractive geared IRR of over 16% per annum (double the Company's 8% per annum target return). The sale price is in line with latest book value.

Disposal of social housing assets

The Company has sold 11 long-let social housing assets for a combined sum of GBP8.5 million, reflecting a 5.2% exit yield, to a social infrastructure fund.

The disposal pricing reflects a premium of 14% to purchase price, a 2% premium to latest book value (as at 31 March 2020) and generates an attractive geared IRR of 13% per annum.

Sale of non-operational land at Travelodge property

The Company has sold a non-operational plot adjacent to its Travelodge hotel in Llanelli to a petrol filling station operator for GBP500,000.

The land was not used by the hotel and the sale has not reduced its rental level or capital value and thus represents an additional net receipt for the Company from land which had zero book value.

The Investment Advisor is also in advanced discussions regarding further value-enhancing asset management transactions at other Travelodge sites.

Forward funding acquisition of Lidl foodstore and EV charging points

The Company has exchanged contracts on the pre-let forward funding acquisition of a Lidl foodstore in West Bridgford, Nottinghamshire.

The foodstore has been fully pre-let to Lidl on a 25-year lease (with a one-off break right at year 15), with five yearly rental uplifts in line with annually compounded RPI inflation (capped at 3% pa and collared at 1% pa).

The lease is guaranteed by the top trading company of the Lidl group, which has GBP10.5 billion of net assets, and the foodstore has a low starting rent of GBP16 per sq ft.

The Company is also forward funding EV charging points at the property, pre-let on an unbroken 25-year, RPI-linked lease to a specialist EV operator.

The freehold site comprises just over four acres and benefits from 180 car parking spaces.

West Bridgford is an affluent town in the Rushcliffe borough of Nottingham, situated 1.5 miles south of Nottingham city centre. The immediate area is predominantly residential, with a number of schools and health facilities nearby.

The attractive pricing reflects the off-market, relationship-driven nature of the acquisition and the thinner market for forward funding pre-let assets in smaller lot sizes in the current climate.

The Company is forward funding the property on a fixed-price, pre-let and fully planned basis and therefore not assuming direct development risk. The Company will receive an income from the developer during the construction period at a rate equivalent to the net initial yield.

Acquisition of Aldi foodstore, Lytham St Annes

The Company has acquired, from an administrator, a foodstore in Lytham St Annes, which was purpose built for Aldi in 2014 and has a strong trading history.

The property is fully let to Aldi Stores Limited, the principal UK trading company of the Aldi group, with over 18 years unexpired to first break and benefits from five yearly fixed uplifts of 2.5% per annum compounded. The fixed uplifts will provide rental growth of over 13% in three years' time.

Aldi is one of Europe's leading discount grocers with over 10,000 stores in 20 countries.

Lytham St Annes is an affluent coastal town with a strong tourism industry.

Simon Lee, Co-Manager of LXI REIT plc, commented:

"This capital recycling reflects the Company's continuing, but selective, expansion into the foodstore sector, with a particular focus on right-sized stores acquired off-market at attractive yields and let or pre-let to strong tenants on low, sustainable rents. The sales have crystallised attractive returns on assets from which we have extracted maximum value."

[thewheeliedealer] 13/10/2020 20:11

Hi all,

My mate Peter @Conkers3 and myself did a ‘Twin Petes Investing’ Podcast a few days ago and part of our discussion includes LXI and our take on commercial property. We also chatted about loads of other Stocks and some Ideas for research, and the outlook for Markets and as usual a fair bit of educational stuff with regards to Investing.

Anyway, if you use Apple, Audioboom, Overcast or Spotify you can find it under the 'Conkers Corner' Channel (you want TPI Podcast 33) and you can find it on Soundcloud at the link below.

I hope you enjoy it and find it useful,

Cheers, WD
@wheeliedealer

[skinny] 05/10/2020 07:03

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Q4 rent collection of 97%

The Company has been actively engaged with all of its tenants over the summer and is pleased to report robust rent collection to date of 97% for the September to December 2020 quarter (Q4).

This figure is calculated on the basis of cash received versus contractual rent owed and is not adjusted by rent deferrals.

Further increase in dividend guidance

As a result of its robust rent collection, the Board is pleased to report that it has today further increased its quarterly dividend guidance by 6% to 1.44 pence per share for the quarter ending 31 December 2020.* This dividend is expected to be fully covered by net rental income for the quarter.

Rent reviews

The Company is pleased to report that it completed 41 rent reviews between 1 April 2020 and 30 September 2020 (representing approximately 20% of the portfolio rent roll) with a weighted average uplift of 2.1% per annum.

The average increase outperformed both RPI and CPI inflation over the period and reflects the benefit of the collared and fixed rental uplifts which are contained in 71% of the portfolio's rent reviews (by rental value). 96% of the Company's rental income is either index-linked or contains fixed uplifts. The index-linked reviews are predominantly RPI-linked.

The Company's portfolio comprises 139 properties let or pre-let to 52 tenants on long, index-linked leases with over 22 years unexpired to first break on a weighted average basis.

Positive rental update

The Company is also pleased to report that, following further agreements made with its tenants across a range of sites, the temporary rent reductions granted to its tenants due to the impact of Covid-19, as previously announced by the Company, are now expected to be at the lower average rate of 2.85% of the Group's total annual contracted rent for the financial years ending 31 March 2021 and 2022.

[milly85] 17/9/2020 18:02

I can-not see any info regarding the dividend payable on the 16th Oct as being a PID
Am I missing something?

[skinny] 17/9/2020 07:05

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The Board of LXI REIT plc (LXI) is pleased to report that, following robust rent collection for the quarter ending September 2020, it has today increased its quarterly dividend guidance by 4% to 1.35 pence per share.* This dividend is expected to be fully covered by net rental income for the quarter.

Dividend declaration

The Board is pleased to declare today an interim quarterly dividend in respect of the quarter ended 30 June 2020 of 1.30 pence per ordinary share, in line with the previous quarterly dividend guidance issued in May 2020.

The dividend will be payable on 16 October 2020 to shareholders on the register at 25 September 2020. The ex-dividend date will be 24 September 2020.

[spectoacc] 24/7/2020 13:18

Agreed, the best management team for Long Lease I reckon - I'm only in AIRE instead on price.

[essentialinvestor] 24/7/2020 10:17

Underlines the quality here.

[spectoacc] 24/7/2020 09:02

Sell at 5.25%, buy at 5.9%, but I'd take Lidl/Home Bargains over social housing I reckon. More incremental good deals from LXI (not currently a holder but wish they'd change mind & buy AIRE ;) ).

[skinny] 24/7/2020 08:56

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The Company has sold two portfolios of long-let social housing assets for a combined sum of £10.7 million, reflecting a 5.25% exit yield, to two separate social infrastructure funds.

The disposal pricing reflects a premium of 14% to purchase price and generates a geared IRR of 14% per annum over the Company's three year ownership. The prices are in line with latest book values as at 31 March 2020.

The Company is recycling the sale proceeds into the following pre-let forward funding acquisition, which is being acquired at a higher yield, with enhanced tenant covenants and RPI uplifts, underpinned by the robust discount foodstore sector.

Forward funding acquisition of Lidl foodstore

The Company has exchanged contracts on the pre-let forward funding acquisition of a Lidl foodstore in Barnard Castle, County Durham for £7.5 million, reflecting a 5.9% net initial yield (net of acquisition costs).

The 20,828 sq ft foodstore has been fully pre-let to Lidl on a 20-year lease (with a one-off break right at year 15), with rental uplifts in line with RPI inflation. The adjoining 15,000 sq ft unit has been fully pre-let as a discount store to Home Bargains on an unbroken 15-year lease, with upwards only open market rent reviews. The Lidl accounts for 70% of the total value.

Both leases are guaranteed by the top trading companies of the tenant groups, which have significant net assets (Lidl: £10.5 billion; TJ Morris (t/a Home Bargains): £1.1 billion). The properties also benefit from a low average rent of £13 per sq ft, resulting in a low capital cost of £209 per sq ft.

The attractive pricing reflects the off-market, relationship-driven nature of the acquisition and the thinner market for forward funding pre-let assets in smaller lot sizes in the current climate.

The Company is not developing the property or assuming development risk and is forward funding the property on a fixed price basis. The Company will receive an income from the developer during the construction period.

[essentialinvestor] 21/7/2020 13:05

Added a small amount under 1.08, drifting down towards £1.

[essentialinvestor] 02/7/2020 10:38

Added a small amount under 1.16. May be opportunities lower down.

[nickrl] 02/7/2020 08:47

Quality update a few other propcos's would do well to present with same clarity

[skinny] 02/7/2020 07:05

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The Board of LXi REIT plc (ticker: LXI) provides the following update on rent collected for the June to September 2020 quarter:

· 84% has been received to date;

· a further 6% was already subject to agreed deferral and repayment plans entered into following negotiations with tenants in respect of the previous quarter (of which the majority is due to be received within three months of the quarter);

· a further 4% is subject to ongoing negotiations with tenants; and

· a further 6% has been granted as temporary concessions (being predominantly the agreed terms of the Travelodge Hotels Limited ("Travelodge") CVA as announced on 19 June 2020).

In addition, the arrears in respect of the March quarter day have been settled in line with the agreed terms of the Travelodge CVA as announced on 19 June 2020.

The Company continues to seek to strike an appropriate balance between protecting the interests of its shareholders and providing proportionate support to a small number of its tenants which have been impacted temporarily by Covid-19.

These robust collection statistics reflect the diversification and resilience of our tenants and sectors, the importance of our assets to our tenants and the proactive approach adopted by the Company, our Investment Adviser and our tenants. The Company remains well capitalised, with a strong balance sheet, low leverage, significant liquidity and very long term debt facilities.

[skinny] 01/7/2020 07:04

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LXi REIT plc (ticker: LXI) is pleased to announce that the Company's Investment Advisor has negotiated an important lease restructure with one of its largest tenants, BCA.

The property represents one of the Company's largest assets with a March 2020 book value of £61 million. The site also represents a key operating asset for the tenant, BCA (which owns WeBuyAnyCar.com), being a 121 acre storage facility in Corby, primarily enabling online sales. BCA's commitment to the location was further evidenced by their recent freehold purchase of an additional 40 acre expansion site adjacent to the Company's property.

The term of the lease has been extended from 16 years to 25 years, with no tenant break right.

The rent review has been converted from uncapped RPI with no collar, to RPI, capped at 2.5% pa and collared at 1.5% pa. The new collar provides a minimum rental uplift for shareholders, which is attractive in the current environment.

The rent remains unchanged on the asset and the first rent review will be five years from the date of the lease extension.

Following discussions with the Company's valuer, Knight Frank LLP, it is anticipated that the lease restructure will be accretive to shareholders.

After the lease restructure, 95% of the Group's rental income is inflation-linked or contains fixed uplifts and 68% of the income now has a minimum contractual uplift/collar, regardless of the inflation rate, averaging 2% pa.

[toffeeman] 22/6/2020 09:04

I cut and ran last week (broke even) - too much downside uncertainty for me atm

[brwo349] 22/6/2020 09:04

Do the math. If you are commuting to work and your train ticket costs 80 quid a week and travel time door to door both ways is 3 hours each day , think of the savings in both time and money if you can work from home.

[skinny] 22/6/2020 08:44

Peel Hunt Outperform 113.40 114.00 - - Reiterates

[njb67] 05/6/2020 21:21

Not so sure that is the case. 100% homeworking will largely not happen, I agree. I would though expect companies to move away from long term rents and space for all to on demand and space for some. Not commuting/travelling aids productivity and increases disposable income so those that can make more virtual working work, will.

Expect operators that can offer flexible space on demand to do well. Total office footprint will fall, which has knock on implications for associated businesses who service them.

Exited property sector today: LXI and TRY. Both have been very profitable plays despite the recent downturn and were part of long term portfolio. Suspect property sector will require significant correction for the new normal, so happy to watch this sector from the sidelines for now.

[chucko1] 05/6/2020 18:30

Yes, offices likely to be OK in the medium term. Working at home productivity will soon be shown to be far lower, and most people go to the office as a social matter. Especially regional offices where travel is not such a bind.

Even if some continue to work from home, the remainder will need more office space with new distancing regulations. This will not cost a company more as peoples' homes cost them virtually nothing.

In the short term, there is the matter of some unpaid and maybe unpayable rent. But that is not likely to have any meaningful effect on most UK REITs.

[winsome] 05/6/2020 17:30

RGL is 80% offices, which are going out of fashion quicker than turkey on Boxing Day due to home working. Which I believe is a short term trend. Who could really stand working from home full time? Only I minority.

[chucko1] 05/6/2020 15:50

I cannot see why RGL has been affected. What do they have in Travelodge-like things? Cannot see from the annual report. But it got hit hard at the same time as LXI got hit. But not today.

[winsome] 05/6/2020 13:50

Well, if LXI agree to the CVA, Premier Inn and Greene King will want discounts too and who could blame them. If they do agree to the CVA then I'll assume the latter and reluctantly dump my holding if the share price is still this high. Been topping up on SHED which has zero voids, 100% rent collection and bigger div and without the same tenant risk.

[spectoacc] 05/6/2020 09:33

@winsome: it does, or at least - in best-case scenario mode.

Car parks won't be doing too well lately either.


Edit - hadn't realised quite so many Travelodges. Be interesting to see if the CVA gets through, and where that leaves the negotiating position of other hotel chains.

[skinny] 05/6/2020 09:32

FWIW :- Peel Hunt Outperform 122.80 122.40 - - Reiterates

[winsome] 05/6/2020 09:27

Not just Motorpoint. They have other tenants in the automotive industry and Bombardier centre servicing business jets. Student accommodation too, which will struggle next year. Pure Gym and Greene King pubs. Yet share price is doing rather well. Markets seem to be in a bubble at the moment.