Lxi Reit Share Discussion Threads

[nickrl] 07/6/2023 10:26

@riverman rates could have been lower but they were two separate entities on different strategies. One of the RCF's is main driver of the higher rates even with interest rate caps so they could keep that down but as i say these people have itchy fingers and wont want to sit back for too long they like doing deals too much.

Good point re SUPR although LXI has a few more years on the lease length.

[riverman77] 07/6/2023 09:42

Looks OK, but not sure I why I would choose this over SUPR which offers similar risk profile (long dated, secure cashflows) but on a 7.5% yield. Also the cost of their debt seems pretty high at 4.7% - they should have locked in the much cheaper rates that were available couple of years ago.
Can't see them doing a raise when on such a big discount, so perhaps a merger more likely (maybe even with SUPR?).

[nickrl] 07/6/2023 09:30

Publishing comparatives is a bit meaningless as LXI of 12mths ago is fundamentally different to todays entity.

Anyhow divi is covered and with majority of debt locked in for many years so with 2-3% rental growth baked in for a few years the divi is well supported. They are targeting 6.6p divi for FY24 is this one of the more certain 6.6% yields in the peer group. Maybe but not sure Leslau is just going to sit back so they will always be on the lookout for the next deal.

So in the presentation they confirm that!! Fund mgr stated LXI have the potential to assist in consolidation in the REIT sector. Also says they will continue to recycle assets and are always on the lookout for opportunities especially as they reckon we are at the low point on valuations.

Certainly tempted but whats the risk of a big fund raise to finance an acquisition is weighing on my final decision.

[tradez4dayz] 07/6/2023 07:17

Agreed though some of the property indexes do tend to agree.But who knows what could happen next week and change things again. I don't like it when fund mangers claim to be fortune tellers either!Though having said that I think I am going to take my first dabble in today. 7%ish dy on what is a strong tenant base swung it for me.

[spectoacc] 07/6/2023 07:00

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 16:48

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 12:07

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 10:51

@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 09:00

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 08:53

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 07:11

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 18:51

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.