Lxi Reit Share Discussion Threads

[pyufak] 29/8/2023 07:55

the scale of the fee I agree with; but if people can point me in the direction of similar sized REITS with lower fee structures I'd happily take a look. I think it is an industry & finance problem which will not be fixed in the near term. If I want to own this asset pool I have little choice but to pay the management fee given it isn't something I can replicate on a personal level like buy to let residential say.

Re: incentive structures I think you have a point. I'd like to see the fee changed to be linked more to share price performance than assets under management ... but again this isn't the nature of the industry and while I agree with the sentiments it isn't changing near term.

Growing the portfolio - I have less concerns near term. With the share price so far below NAV and their focus being bringing down the LTV towards 30% I don't think they'll be active growing the asset base unless they really think it is a slam dunk opportunity / merger or REITs again etc.

I guess this discussion does summarize a problem with the REIT. When I try and discuss dividend cover, metrics of the portfolio (which I think are attractive) it invariable ends up on the management charge and investment manager issues which I guess demonstrates how other retail investors see the name - something which is food for thought.

[williamcooper104] 29/8/2023 07:47

One thing I've learned over the years is that there's always a conflict with external management; so you have to have complete trust in management REIT world (especially in the US) is littered with examples of bad external managers doing serious damage Conversely some managers have slashed/suspended their own fees to restore dividend coverage (that's another unique US reit concept - that REITs ought to actually cover their dividends) It's also common that when a reit gets to a large size management is internalised - lxi is above that size now

[spectoacc] 29/8/2023 06:59

What irked me greatly was Alvarium stripping (by my calc) c.£14m/year out of LXI. Why? There's little management to be done, it isn't MLI where there's 10,000 tenants to pursue every month, or developments to manage. It's long lease, collect the cash.

The other thing I didn't like was their need to grow - eg the £500m SBRY deal that fell through. The bigger they grow, the more the fees rack up, hence that becomes the business model. Acquiring SIR another example, I don't see a better co as a result.

It should cost a few million at most to run LXI - being generous - a holding co of things like Alton Towers and long-lease Travelodges.

Bottom line on fees is that yes, it's a big trust & only a small % of it is taken each year, but the fees come out of income and that amounts to a large %.

Saying that, there's a price I'd buy LXI again.

[nickrl] 28/8/2023 22:10

It is one of the better covered divis at the cash level currently with debt locked in for several years before any major refi needed. Im not in here and despite positive metrics never been attracted to it.

[pyufak] 28/8/2023 20:42

I guess I'd summarise my view as would I vote to oust them - yes. Would I prefer LXI change advisor from them - yes. Are my concerns surrounding the investment manager allayed with Nick Leslau on the board and Simon Lee buying significant amounts of shares - yes.

However, this does remind me to try message to reflect the above view and your view William

[williamcooper104] 28/8/2023 19:41

And so long as LXI is managed by Alverium it will always trade at a discount Equity markets never forget being legged (fixed income often does) So if you like LXI then lobby to change the manager A new manager equals a share price re-rating

[williamcooper104] 28/8/2023 19:39

You can say HOME was a fraud perpetrated by a different team but ultimately what did Alverium do They sold the contract to the fraudulent management team and retained the option to buy it back They ran away

[williamcooper104] 28/8/2023 19:35

Hard to like a reit run by a bunch of crooks

[pyufak] 28/8/2023 11:19

I personally would have liked to see a lower dividend increase / some of the recent asset sale proceeds going to a discount management facility but I’m also happy if it is used to reduce leverage.

[pyufak] 28/8/2023 11:15

Effectively management can’t (and in my view shouldn’t) do anything here but let the portfolio run. Maybe the odd sale and adjustment on the financing side but they’re in a good position. The LTV will fall naturally or the portfolio yield will tick higher while the NAV treads water given the rent roll uplifts. By my calc a 90p share price implies a 7.5% portfolio yield so I think there’s a lot in the price here.

[pyufak] 28/8/2023 11:10

I listened to the management presentation again this weekend. Outside of the PE ownership of Merlin / Travellodge I struggle to find things not to like about this REIT. Even the PE ownership - PE companies will have considerable equity at stake here. The Alvarium link I discount - HOME REIT was fraud by a completely different team and Simon Lee has been buying large amounts of LXI REIT / Nick Leslau owns 5% of the company and sits on the board - he is no fool.

The discount is as wide or bigger than peers; the dividend is covered for the next 2 to 3 years at at 5% annual increase by my calcs. LTV is 36% after the recent asset sale declining to 33.5% in 18 months time. The portfolio is broad based and very defensive (unlike say SUPR) at a 5.4% blended yield. Very high headroom cover on the covenants. I cannot see it performing while there remains uncertainty from interest rates but as a long term income holding I’m looking for I’m very tempted to add.

[spectoacc] 17/7/2023 15:29

I liked:

"" On behalf of the Board, I would like to express my thanks to Freddie for his invaluable contribution to the growth and success of the Company."


Have they seen the share price?

[williamcooper104] 17/7/2023 14:55

Ordinarily wouldn't be too worried But given it's our friends at Alverium and what happened at HOME reit when the finance director resigned (and no even if there's problems at LXI doubt it's just as bad as HOME) I'd be concerned

[tradez4dayz] 17/7/2023 13:58

Rns thjs morning saying Cfo has decided to resign after 5 years.Thoughts?

[spectoacc] 07/7/2023 09:01

Back in for a few at 83.2p. Just feels too cheap, albeit there's a lot of low-recession risk stocks in the same boat - GCP, SEIT, SUPR etc. Trouble is, a mildly stale bull on all of those ones already.

Going lower if interest rate expectations are confirmed, but I think rates won't go as high.

[speedsgh] 23/6/2023 13:49

That's £300k worth of purchases by Simon Lee, Fund manager over the past week.

[nickrl] 21/6/2023 18:01

Forecast yield 7.4% and with recent refi giving them some space now on debt pressures and my s/sht say that divi is covered at the cash level.

Travelodge have had a reset with LXI which must be helping with underpinning the increased valuation but agree PE can't be trusted and risk here is it gets taken out at a high price just as a potential recession looms.

[spectoacc] 21/6/2023 09:07

If I trusted LXI - if Travelodge weren't PE owned, and allegedly up for sale, and Merlin wasn't PE owned, with Alton Towers supposedly up for sale - I'd think the director buy RNS'd pre-market at 93p implied c.88.8p this morning was something of a steal.

It has a price for me, and in another world this would probably be it, but not currently a holder.

As well as not entirely trusting them, there's so much Opportunity Cost out there, including averaging (down) SUPR & GCP.

[spectoacc] 15/6/2023 14:01

Looks like a retest coming up.

Saw maybe last Sunday or the one before that Alton Towers is up for sale. Presumably a better price now there's no longer an RPI linkage to the rent.

Fools.

[speedsgh] 08/6/2023 15:03

Profitable £31M sale of St Albans Retail Park -

The Board of LXi REIT plc (ticker: LXI), the specialist inflation-protected very long income REIT, is pleased to announce that the Company has sold a retail park in St Albans ("the Property") to a UK institution for £31 million, equating to a net initial yield of 4.7%.

The Property is let to B&Q (62% of rent), Aldi (28% of rent) and Costa (10% of rent) and has a weighted average unexpired lease term of 18 years.

The Company acquired the Property through a forward funded purchase for £24 million in 2019. The sale price is in line with the 31 March 2023 book value, having been held for sale, and generates an attractive 11% IRR.

The net sale proceeds are anticipated to be used to reduce leverage and, potentially, to be invested in the Company's higher yielding pipeline.

[nickrl] 07/6/2023 11:26

@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 10:42

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 10:30

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 08:17

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.