Lxi Reit Share Discussion Threads

[spectoacc] 09/12/2022 15:04

Plenty of faces on here:
[...] (Edit - Google LXI REIT, go to About Us)

Disagree tho. Yes, it takes time & effort to put a portfolio together, and yes, a large amount of management for comm prop. But that's the small end, the short lease end, the fixing the roof, collecting the rent, negotiating the rent increases, negotiating the leases, finding new tenants end.

LXI is almost none of that. It isn't growing (not now the discount is persistent), it isn't "managing" in the sense of most comm prop because it's all so long-lease.

Not saying there's nothing to do - but that what there is doesn't remotely justify the cost.

Don't see why c.£1.6m - rather than £16m - isn't enough. I count 18 people on that link above, a number of them part-time. I don't doubt most of the profit flows through to Alvarium, but still.

Or look at it this way - if the Sainsbury's deal had gone through, that was another £500m NAV, and an extra £2.75m pa in fees. Can you seriously say a bunch of long-lease Sainsbury stores, on pre-determined (by inflation collar/cap) uplifts, justifies £2.75m PER YEAR, forever?

That's my beef - and is little different to the Unit Trusts pulling the same trick. We'll take 1%, and we'll take it whether we're managing £10m, £100m, £10bn.

At least LXI can argue more property = more effort. In which case, employ a £100k person to manage it.

Again - 16 people - what do most of them do all day?

If the value of Alton Towers doubled (say a notional £500m now, to £1bn in 10 years time), does that justify doubling the fees being ripped out? How? LXI haven't had to do anything.

Or - consider the quantum of the fee cost vs the income LXI earns from rents. For starters, any fees should be on lower of market cap or NAV, but far better if they took a % of the rent for managing. I think that would show up the actual cashflow drain much better.

Edit - I want to like LXI, have held before, and had a lot of SIR (who badly mismanaged the Alton Towers lease when they let them out of uncapped RPI, fwiw).

[pyufak] 09/12/2022 14:48

how many staff do they employ; offices etc - it all adds up. I think they do a great job - you want to employ talent then you have to pay them and so far the management moves have been deft. Having managed a small commercial property portfolio I can attest it isn't just leave it and collect the rents - there's a lot of work involved in the day to day.

On the note of management - moderate sizes buys in recent days - two 85k clips and one 250k

[spectoacc] 05/12/2022 08:18

Perhaps a better way to look at it - I reckon Alvarium take slightly more than 10% of the rental income in fees every year.

[williamcooper104] 04/12/2022 18:45

External management works for small REITs, which can't afford a full C suite But above a reasonable size best to go with internalisation But to get there you have to pay the external management platform to buy out their contract; so you get a one of hit to NAV but lower fees thereafter - PHP recently Usually the management team once internalised roll their gains into equity such that they've then got good alignment In the US; where REITs are way better understood, much larger/liquid market there's usually a premium for internal and a discount for external

[nickrl] 04/12/2022 17:44

They paid LXi REIT Advisors Limited 6.2m in H1 so your 16m is probably right in the enlarged group. Not the only REIT where the advisors have much to do but id be more interested in how the various refinancing goes as big loans due in 2023 (184m earliest Apr 23) and 2024 (385m).

[tradez4dayz] 04/12/2022 17:00

It's got the lowest Total expense ratio in the market. Lxi are also one of the more dynamic reits out there with m&a activity, income strip etc. I think they do a lot more than just collect the rent.

[spectoacc] 04/12/2022 15:24

LXI have the same manager as HOME, find that rather perturbing (HOME bordering on a fiasco).

Struggling to see any way in which LXI could be "dodgy" tho.

Edit:
"Annual fees paid to the Investment Advisor are highly competitive: annual fee of 0.75% on market capitalisation up to or equal to £500 million, 0.65% on market capitalisation from above £500 million to £2 billion, and 0.55% on market capitalisation from above £2 billion"

Who knows, maybe that is "..Highly competitive.", but it seems scandalous to me. There's little in the way of "management" to do on 25 year, vaguely inflation-related, but certainly not frequently renegotiated leases.

Putting the portfolio together? Fighting Travelodge? Sure. But keeping it ticking along, which is surely what the majority is about? £2.6bn of long-lease property, an average of say 0.63% pa, every year, is £16m a year in fees I reckon.

Correct me if I'm wrong, there's a lot of noughts involved. £1.6m would be far more reasonable. That's every single year, year in, year out.

Incidentally, HL say 0.75% AMC, ongoing charge 1.92%, but they're often wrong and no idea how they arrive at that OC.

I wouldn't say no to £16m pa (plus other costs) for collecting rent from Alton Towers & supermarkets.

[skinny] 15/11/2022 07:03

LXI REIT (ticker: LXI), the specialist inflation-protected very long income REIT, will announce its half year results for the six months ended 30 September 2022 on Thursday, 24 November 2022.

A Company presentation for investors and analysts will take place via a live webcast and conference call at 9.00am UK on the day.

To access the live webcast, please register in advance here:



To register for the live conference call, please use this link to receive unique dial-in details:



The recording of the webcast presentation and slides will be available later in the day via the Company website: www.lxireit.com/results-centre

[williamcooper104] 18/10/2022 21:20

Sounds like they've bought caps - which implies that given where rates are/are going to then that 4.2 is their likely rate Didn't they do a rent strip funding deal - eg selling off part of the income on Alton Towers, that's debtIf the 4.2 is for long term debt with minimal refi risk then it's not so bad - there's plenty of REITs with super cheap 2 something debt that if rates/spread don't come in us going to 7 something in a few years time Don't hold LXI but given general sell off starting to have another look at it

[spectoacc] 18/10/2022 13:30

Directors had massive stakes in SIR too, I think it's what makes them so blind.

In what macro situation is LXI a buy? I guess if inflation moderates but gets stuck around 3-4% (possible), if recession isn't bad (unlikely), if the risk-free rate on Gilts stays down (no return to ZIRP, but at least possible).

Doesn't look expensive here, but there's a heck of a lot of Opportunity Cost out there. And they need to find an alternative business plan than "issue more shares/buy more assets".

Be interested to hear from any shareholders who can answer my debt questions from two posts above. If you can't, you shouldn't be long :)

[speedsgh] 18/10/2022 13:24

Sizeable purchase yday by Simon Lee, a Partner/Fund Manager of LXI's Investment Advisor.

Bought 207,989 shares at 118.9p = £247k

[spectoacc] 10/10/2022 08:05

"98% of the rent is inflation-protected or contains fixed uplifts."


Where to begin. "Inflation-protected" it isn't, when inflation is c.10% & uplifts capped at 3% or 4%.

How much of that 98% has "fixed uplifts", and what level are they set at? I thought the vast majority was (fake) index-linked, so why not state the split.


"The attraction of long inflation-linked income is further evidenced by the fact that the 20-year index-linked gilt rate remains low at 0.63%, which provides a significant spread to the Company's current portfolio yield."

But but but. Linkers are inflation-linked, it's why they're so expensive. LXI's rents aren't - or at least, I'm unaware they've any uncapped uplifts left?


There's a lot to like at LXI, but frankly, not sure I trust them. They're not likely to be growing in size now they're trading well below NAV, & borrowing is expensive. They've recession risks with various tenants, albeit they'd likely be the last to be affected (but certainly were with Travelodge, during Covid). They've sorted out their debt, which is excellent, but 4.2% seems very high for what are meant to be rock-solid, quarter-century leases. Several small REITs with much smaller and less secure tenants are paying below 2%.

I think the NAV will eventually catch up (down) the share price. There's a price I'd buy LXI at, but I strongly dislike the presentation.


Edit - I may have misinterpreted the debt position:

"As at 30 September, the Company's pro-forma LTV was 33%. 100% of the Company's debt cost is fixed or capped, with a maximum weighted average cost of debt of 4.2% per annum."


That doesn't say average cost of debt is 4.2%, it says maximum weighted average - what does that mean? That as interest rates rise, the most they'll pay is 4.2% on average? For how long? At what interest rate level? What are they paying now?

Why is there no mention of duration, or have I missed it?

[speedsgh] 10/10/2022 07:49

~ Collected 100% of rents due in H1
~ 97 index linked rent reviews resulting in average annualised rental growth of 3.7% on rents reviewed
~ LfL rental growth £4.8m; total annual rent £201.2m
~ LTV 33% at 30/9/22; 100% of debt cost is fixed or capped; maximum weighted average cost of debt 4.2% p.a.
~ Portfolio valued at £3.65bn at 30/9/22; LfL valuation change in H1 of -1.4%
~ EPRA NTA at 30/9/22 expected to be not less than 139p/share (31/3/22: 142.6p)
~ Interims to be released Thurs 24 Nov

Trading Update and Notice of Half Year Results -

[nickrl] 27/9/2022 19:28

SBRY give nothing away in their RNS's as to whether they've made a few quid on the side and despite they were using the proceeds to fund the buyback of the JV from SUPR they say thats still going ahead.

[spectoacc] 26/9/2022 12:34

Very good point @speedsgh - something shareholders are in the dark about (but presumably not those shareholders whom they've been freely discussing it all with).

[speedsgh] 26/9/2022 12:31

@gstarkey - I believe they were forced to make their initial statement due to a leak to the press. However, what I understand less is why they proceeded to exchange of contracts without first tying down funding for the deal. By exchanging contracts they would have presumably become liable for paying some form of fees/compensation for not proceeding to completion? Of course, it all depends on what was written in the exchange contract.

[gstarkey] 26/9/2022 11:49

Astonishing this proposed deal wasn't run past their major shareholders BEFORE going public. Board would have realised it was a non-starter and the deal would have been pulled sooner and we would have been none the wiser. This way the Board has egg on its face and has probably racked up substantial advisor fees in an abortive process. Paying for whoever advised them not to consult their major shareholders first will annoy shareholders further.

[spectoacc] 26/9/2022 07:56

Infuriates me when a Board claims to have discussed "...With its shareholders" when I can almost guarantee not a single one of the large number of private shareholders have had any input. SIR were as bad, before the merger, and plenty of co's besides (SGEM particularly heinous - they took 3 months to respond to an email, by which time the co was in wind-down).

LXI's expansion period is over IMO. Hardly alone in that, but dressing it up as due to "stock market volatility" and saying shareholders are all supportive is clearly false. If they're all so supportive, why has it been sold down 16p?

The world has moved on from low yields, as all us small REIT holders know to our cost.

[nickrl] 26/9/2022 07:47

Thats to the point but basically the major shareholders have told them they won't be participating in share raise at that price i guess.

[spectoacc] 26/9/2022 06:19

So - a question for LXI shareholders. Did you partake in the "..Detailed and supportive discussions.." ?


"Following its announcement on 22 September 2022 and detailed and supportive discussions with its shareholders, the Company has notified Sainsbury's of its decision not to proceed further with the portfolio purchase or equity funding given the current stock market volatility."

[spectoacc] 23/9/2022 08:05

Wonder if some major s/holders have hedged their bets by selling down? In which case, they still get it away. Not particularly good business but then again - it's not their money.

[melody9999] 23/9/2022 07:58

Agreed Spec - but if they had cleared it, why would the share price fall back? Would have thought the placing price would have provided support?

[spectoacc] 23/9/2022 07:52

Seemed a bit much trying to be raising cash at a premium to NAV in this market. You'd think they'd have cleared it with major shareholders first tho.

[melody9999] 23/9/2022 07:43

They won't get the Sainsbury placing away at the current share price will they?

In which case the deal does not go ahead. Given the share price action since the deal was announced, that may be a positive?