Lxi Reit Share Discussion Threads

[spectoacc] 09/3/2023 16:20

105p now, not the best-looking chart.

[spectoacc] 07/3/2023 17:42

Going to be a lot of squeezed income for REITs over the next few years, and the better the rate they're on now, the worse it will be on renewal.

LXI may yet be doing well getting in early - no indication rates will come down anytime soon.

[nickrl] 07/3/2023 17:36

@speedsgh looks like it will be around 6% on the 150m new facility or near double what it was. Also they haven't got the full 180m out of this lender and looks like that they only wanted Travelodge as security so have extended the HSBC loan at increased margin of 2.05%+SONIA although thats capped at 1.85% till Jul23.

Pretty well outcome as expected and just chops out a few million less for dividend increase in future but with yield approach 6% starting to get interesting.

[speedsgh] 06/3/2023 11:59

£150m loan facility-£60m extension-Wider refi HoT -

The Board of LXi REIT plc (ticker: LXI), the specialist inflation-protected very long income REIT, is pleased to announce that it has completed the first stage of its ongoing refinancing with a new, £150 million 16-year, interest-only term loan signed with a leading insurance company ("New Facility"), a new lender to the Group, and an extension to its existing HSBC Facility...

... These two facilities represent the first step of the Company's wider refinancing strategy to replace all of its near-term debt maturities. The second step is at an advanced stage of negotiations with agreed heads of terms, with a club comprising a number of the Company's existing lenders.

A further announcement, which will include additional details about the Company's new weighted average cost and term of debt following the refinancing process, will be made upon signing of that facility.

[williamcooper104] 16/2/2023 11:18

Anyone investing here needs to check out HOME reit and what Alverium has just done

[tradez4dayz] 13/2/2023 13:29

Agreed they need to go but surely the pros look even stronger> get rid of alvarium> long term cash savings > manager alignment and succession planningThey seem to be building for it is all I am thinking.As you say it's a lot of money for Alvarium to lose so will be a bun fight

[williamcooper104] 13/2/2023 13:22

It wouldProblem is you'll have to pay Alvarium to buy out their contract Alvarium have totally destroyed their reputation on HOME - personally LXI is a hard avoid until Alvarium are gone

[nickrl] 13/2/2023 12:51

@Trade4dayz thanks for doing that internalisation would add a fair bit to free cash flow although some of it will be swallowed up by increasing interest charges.

[tradez4dayz] 13/2/2023 12:17

Done some digging on the finance director from someone who used to work with him, he apparently led the insourcing at Empiric. Their summary of him was that he was pretty impressive. I feel that this is another sign they are heading to internalisation.Knocks the alvarium stuff on the head and gives them a clean break.

[spectoacc] 09/2/2023 20:45

I want to like LXI, but I've a number of problems with them. The main one is the incentive to grow grow grow, hence the £500m SBRY deal that never was. Alvarium get to rip something like £14m a year out of the Trust in fees, for what is no more than a dozen or so full-timers. Sorry, but there simply isn't the same work involved with a long-lease REIT as with eg MLI, with potentially thousands of flighty tenants, weekly lettings, chasing rent etc.

Secondly, I had a "debate" with SIR over their preposterous payment to extend the Alton Towers lease (where else did they think they'd go?) and also completely remove the uncapped RPI - for that alone, I'd want LXI very, very cheap. I sold out a large holding after speaking with the CEO, who seemed to believe inflation would be transitory.

Thirdly, LXI/Alvarium are obsessed with duration, but it's not all about that, as Covid/Travelodge showed.

Fourthly, I think most on here have misunderstood the news today - Ms Short has joined the Alvarium manager of LXI, not LXI itself. "LXI REIT Advisors" is Alvarium, just as HOME REIT Advisors were (and arguably, IMO, still are. You don't sell a subsid with an option to buy it back at exactly the same price).

Do I think Simon Lee, or Alvarium, are dodgy, as per HOME? No, but I do think a lot of digging is needed into some of the deals, that there's been too many deals, that they're going to keep trying to grow all the time to expand the cost base, that they're obsessed with WAULT to take to the bank for more borrowing, at the expense of anything else.

Counter to all that - directors have always bought strongly.

[tradez4dayz] 09/2/2023 20:19

Hmmm not convinced about A Short, aew did have a number of issues.They also appointed another chap as finance director. Two quite senior hires, I am convinced they are gearing up for insourcing

[speedsgh] 09/2/2023 19:01

AEW star Alex Short joins Alvarium-owned LXI - https://citywire.com/investment-trust-insider/news/aew-star-alex-short-joins-alvarium-owned-lxi/a2408900

[nickrl] 09/2/2023 10:08

positive update on trading be interesting to see what deal they've managed to get on the refi thats due imminently given where IR are sitting be surprised if they can get for less than 5.5-6%.

[speedsgh] 09/2/2023 07:52

"material and comprehensive refinancing at an advanced stage"...

LXI have also appointed Alex Short, former Joint Portfolio Manager of AEWU, as Chief Investment Officer...

DIVIDEND DECLARATION AND Q3 TRADING UPDATE -

Dividend Declaration

The Company today declares a dividend of 1.575 pence per Ordinary Share. This is in line with the Company's annual dividend target of 6.3 pence per ordinary share for the year to 31 March 2023.

The dividend will be paid as a Property Income Distribution ("PID") in respect of the Company's tax-exempt property rental business.

The timetable is set out below:

Ex-Dividend date: 16 February 2023
Record date: 17 February 2023
Dividend payment date: 10 March 2023

Rent collection, occupancy and rent reviews

· The Company's operational performance remains robust, with 100% of rent collected in advance for the quarter ending 31 March 2023 (which continues the post-Covid 100% collection record).

· 100% of the Company's portfolio is let, with 98% of the rent benefitting from inflation-linked or fixed rental uplifts and 2% containing upward-only open market reviews.

· The Company owns a wide range of sector-diversified assets let to over 80 strong tenants on long term leases, with a sector-leading 27-year WAULT to the earlier of first break and expiry.

· Since 1 October 2022, the Company has carried out 54 rent reviews, representing 6% of the rent roll, at an average uplift of 3.5% per annum and adding £1.43 million to the total rent, taking the total rent roll to a record £202 million per annum.

· Between now and 30 September this year, a further 52% of the rent is scheduled to go through a contractual rent review, across 94 leases, which should provide a more significant increase in the total rent roll.

· The Company has now completed on the rent-smoothing and regear with Travelodge, the exchange of which was announced in December. Travelodge have also announced a record adjusted EBITDA for 2022 in excess of £200 million, significantly outperforming prior years, including pre-Covid.

Forward fundings, Sales and Acquisitions

· The Company continues to review potential acquisitions and disposals from the portfolio and is in early-stage negotiations on a number of small disposals and a pre-let forward purchase, which it expects to announce over the upcoming months.

· As at today's date, the Company has less than £60 million of development funding yet to complete on existing forward funding projects, which will be fully funded by the Company's existing Revolving Credit Facility. The Company only enters into forward fundings on a fully fixed-price, pre-let and planning approved basis.

[nickrl] 06/2/2023 17:58

@tradezdayz they have c180m debt needing refi shortly although i doubt they will have any issues as most of it is against Travelodge portfolio from which they recently regeared the portfolio. Imagine it will cost them 1.75-2% over the c3% avg of this loan pool but aint going to break them but its a few mil less for increasing the divi. They have c500m in 24 for refi as well.

[tradez4dayz] 06/2/2023 17:09

@specto any thoughts on this one? Think its worth loading up on?

[tradez4dayz] 22/12/2022 17:55

No think interim said 34% at 30 sep working down towards 30% target.But agreed they have a fair bit of debt coming up over the next few years. Interesting to see what they do

[spectoacc] 22/12/2022 08:11

Logically/legally, he can't know something not in the market.

But can anyone confirm LTV is 58% post-the SIR merger? Seems a punt on getting through the significant debt rollovers over the next few years.

[nickelmer] 22/12/2022 07:59

Mr Lee seems to be loading up lately I can only assume he knows something we do not.

[williamcooper104] 15/12/2022 17:34

Has the smell of a backdoor CVA

[spectoacc] 14/12/2022 07:33

At risk of making some of the same points - these aren't the deals I'd be making. But the values are going to give a "material positive" uplift. As far as I'm concerned, things like this are a negative - but at least there's no tens of millions of cash being paid by LXI this time:


"Lease extensions


In return for inserting caps and collars (4% pa and 1% pa, respectively) on the previously uncapped and uncollared RPI rent reviews and converting the reviews to CPI+0.5% pa (to future-proof them for the phasing out of the RPI by 2030), the Company has extended the unexpired lease terms on the 122 Travelodge hotels by a weighted average of nine years. This has the effect of extending the weighted average unexpired lease term to first break ("WAULT") on the hotels from 19.5 years to 28.5 years and increasing the WAULT of the total LXI REIT portfolio from 25.6 years to 27.3 years.


Following discussions with the Company's Valuer, the lease extensions are anticipated to have a material positive impact on asset values and further enhance the investment attraction of the hotels. The change in rent review profile is also designed to ensure that the rents remain affordable over time and avoid becoming potentially over-rented versus market rents. The new collars also provide uplifts in lower inflationary environments."



Same point as Alton Towers - when the Travelodge leases come up for renewal, where exactly does LXI think there'll be going? Build new ones up the road?

And am I right in thinking LXI's LTV is now 58%? Post is a week behind so I'm a week or more behind on ICs, but they stated 58%. If anyone can cope with high LTV, it's a very long leasehold IT, but they'd better hope for nothing like lockdowns happening again. And suspect LTV is what is leading to deals like this one. Increase the V via a stroke of the valuer's pen, whilst simultaneously lowering future rent.

[spectoacc] 10/12/2022 17:07

@Pyufak - always meant to write back to the Chairman after he tried justifying that Alton Towers fiasco in an email, but never did :) Didn't mind them tearing up the uncapped RPI in return for a much longer lease - perhaps uncapped RPI would ultimately prove unsustainable - but SIR making a payment to Merlin of tens of millions of quid on top?! Utterly bizarre.

Unfortunately I'd sold out in disgust before the LXI merger was announced, albeit at a good profit.

Agree re fees in wider finance industry - they're a scandal, from HL up. "Where are the customers' yachts.". But does put me off when I see it going on in ITs, whether at LXI or something more heinous like CHRY.

On many small REITs, the all-in cost can look enormous because it includes 5% stamp duty on purchases. But the c.£16m on LXI is almost free money to Alvarium, and strongly incentivises things like the SBRY deal to grow the fees.

But would have to note that insiders are well invested in LXI, & not ruling out buying back sometime next year (Q1 is going to be brutal to the markets IMO).

[pyufak] 09/12/2022 22:40

Hi SpectoAcc;

I accept some of your points but can go down a rabbit hole of fees in the wider finance industry. I do feel that LXI isn’t the worst offender vs. peers and certainly the SIR management made some great moves for me as a shareholder - fighting travellodge; SIR merger price was NAV which was well above market pre-announcement, fixing the debt etc.

On the Alton Towers leases I debated with you as I wasn’t too upset by the announcement. I was obviously wrong here given inflation has ripped much higher than most expected.

[tradez4dayz] 09/12/2022 18:40

Agreed they are now of the scale where they need to internalise management.