Lxi Reit Share Discussion Threads

[spectoacc] 07/6/2023 08:00

They talk a good game, & the costs are down again, but telling us rates have almost peaked and valuations will start coming back later this year, reminds me of them saying inflation had peaked at c.7%.

[tradez4dayz] 13/4/2023 17:48

Hi Pyufak,Yes they do have one of the lowest cost bases of all Reits, its just a common theme that all externally managed reits all rip profits into the IA.So it's not really a problem of lxi but of all externally managed reits.Re your second point so Lxi reit advisors is owned by alvarium. Hence Specto's hesitancy! I am on the fence about Alvarium as they are separate teams to home and that's what they stress on investor calls.However I never thought home would get as bad as it did so i could well be wrong!!!

[pyufak] 13/4/2023 13:07

Hi Nick & Spectto

Nick - can I ask the costs you feel are too high please? The general % charge of market cap to the investment advisor seems to make the significant bulk of the cost. I agree it is too high for the business model but my understanding was it was one of the lowest in the U.K. REIT space.

Spectto - can you elaborate on Alvarium links and payments of £14m to them annually. I see they are the alternative investment manager but LXI REIT Advisors is the investment advisor. Are these the same entity or different - if different I am sure the bulk of the investment advisor payments are going to LXI REIT advisors no?

I think as an investment proposition LXI looks alright so just trying to understand your concerns / issues with the REIT here.

Many thanks

[nickrl] 13/4/2023 11:51

@spectto problem here is the board and inv mgt are well invested in the business so they will trade it for their needs so given they've pretty fully kept the RCF at same value they will be on the look out for another SBRY type deal. Anyhow just caught up with yesterdays RNS on the portfolio and NTA. Rent reviews over the last 6mths have been at 3.4% on a largely inflation linked basis and with 48% of the portfolio due for review over next 6mths they will get the full cap on most of the portfolio. with current inflation rates. Also with 57% of the portfolio is on annual inflation review you could expect 2-3% natural divi growth so the c6.5% yield is pretty secure at todays share price short of economic depression.

The NTA is expected to drop from 140 > 120 with best asset class being the hotels at -5.5% propping up the rest of the declines with even the theme pks down 10.7% which you would have thought would have been more bullet proof. Still gives another prop that the Q1 NAVs could be reasonably steady with a few percent either way i reckon.

[spectoacc] 13/4/2023 10:00

LXI seem to be a financial engineering co more than a property co these days - and they've done well with the derivatives in fairness.

But c.£14m/year ripped out, year after year, by Alvarium? And a 4.8% divi increase targeted, in a year when RPI was 17%.

I'm not sold on LXI. I want to be, because many of the assets are great, but it's not quite passing the smell test . My guess is that they'll gear up higher to buy more things to earn the large fees on, just as they tried with the £500m SBRY freeholds.

[nickrl] 13/4/2023 09:53

From a wider prospective the margin was 2.23% which is quite a few bps above what others have secured recently but they've done well in being a able cover the cap costs with existing derivate sales. So with the refi risk sorted board now need to sort out the operating costs ie cull them on what is a pretty simple business model.

[pyufak] 13/4/2023 08:11

With inflation coming lower and the rate hiking cycle very mature I’m happy with this refinancing. Sees us through to when markets believe rates will be significantly lower and allows time for the rent increases to feed through if this isn’t the case.

[js53] 11/4/2023 19:51

LXi REIT Finance Advisors recently formed - wonder if that's another way for Alvarium to rip more fees out... Advisors fees for the debt piece perhaps?

[spectoacc] 21/3/2023 15:38

£14m a year I reckon Alvarium rip out of LXI, for a job that has very little management to do, being long-life leases. What a pity for them they never got that £500m Sainsbury's deal over the line.

[js53] 21/3/2023 15:23

Yep.

And of course the merger/reverse takeover results in much higher fees for LXi REIT Advisors.

Self-interest always takes precedence over investors interests I am afraid.

Which is why I would never touch anything run by Alvarium.

See Alvarium Securities have just rebranded themselves to create a bit of distance btw.

[spectoacc] 21/3/2023 13:53

Assume he folded it into LXI shares? SIR had some questionable management decisions too.

[js53] 21/3/2023 10:50

They also overpaid for Secure Income. Nick L has a history of selling at the top of the market - which is exactly what he did here.

[js53] 21/3/2023 10:46

The same “competentR21; management team who were flipping properties to Home Long Income Fund (which they are the investment advisor of - slight conflict of interest) and pocketing the difference into their personal bank accounts. If you think Home REIT is bad the £750m Home Long Income Fund is worse. Same people - led by Mr Lee - which is why his picture has been removed from the Alti Global web-site.

[tradez4dayz] 21/3/2023 10:05

I like LXi, I see them as the potential consolidator in the sector and the income is very secure.I get the alvarium connection but this management team seems competent! The merger they did for example was good business and they seem to be more dynamic than the other reits who just sit on their hands.

[williamcooper104] 21/3/2023 09:10

The bull case is that there's every chance Alverium get booted out

[spectoacc] 21/3/2023 09:06

No one? Pity.

[spectoacc] 20/3/2023 09:34

Come on, someone make me a case for LXI at below a quid.

Debt, Alvarium, prior mismanagement, inflation-linked which isn't - I can make the bear points.

Been dipping toe back in the markets but can't seem to pull the trigger on LXI, SHED, BBOX despite seeing emerging value in all 3.

[williamcooper104] 10/3/2023 09:59

Yep - there's less scope for malice and wouldn't be surprised if they get booted out

[spectoacc] 10/3/2023 09:43

With you on Alvarium of course, tho can't see how LXI can possibly be dodgy - or at least, they're dodgy in plain sight, ie nothing seemingly hidden.

Everything has its price - would be higher than at 50p for me but there's still a lot of risk-free move to be done on most/all of the REITs IMO. If I can get 4%, 5%, with zero risk, why take on recession risk for only a few hundred bp's, if that?

[williamcooper104] 10/3/2023 09:01

Indeed SHED, SUPR and BBOX/SGRO worth a look too Wouldn't buy LXI at 50p owing to Alverium

[spectoacc] 10/3/2023 08:44

Always goes so quiet on ADVFN when the market's tanking - yet it's the best time by far.

Will be some quality on offer soon - perhaps not yet, with things breaking lows/others yet to get there, but half an eye on LXI, SHED, SUPR for eg, without having bought any of them yet. SHED the best quality of those 3 IMO, but would rather see it back at 120p recent low.

[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.