LXI REIT PLC Proposed £100 million issue of equity (4805Z)

TIDMLXI

RNS Number : 4805Z

LXI REIT PLC

20 May 2019

20 May 2019

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EC NO. 596/2014) ("MAR")

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH THE PUBLICATION, DISTRIBUTION OR RELEASE OF THIS ANNOUNCEMENT WOULD BE UNLAWFUL.

This announcement is an advertisement for the purposes of the Prospectus Rules of the UK Financial Authority ("FCA") and does not constitute a prospectus. Investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in a prospectus expected to be published later today by LXi REIT plc (the "Prospectus") in its final form and not in reliance on this announcement. Copies of the Prospectus may, subject to any applicable law, shortly be obtained from the registered office of the Company. A copy of the Prospectus will, following publication, be available for inspection from the Company's registered office and on its website (www.lxireit.com). This announcement does not constitute, and may not be construed as, an offer to sell or an invitation or recommendation to purchase, sell or subscribe for any securities or investments of any description, or a recommendation regarding the issue or the provision of investment advice by any party.

LXi REIT plc

(the "Company" or "LXi REIT")

Proposed Placing, Open Offer, Offer for Subscription and Intermediaries Offer and Notice of General Meeting

Further to its announcement on 18 April 2019, the board of Directors (the "Board") of LXi REIT (ticker: LXI), the specialist inflation-protected long income REIT, today announces the proposed issue of further ordinary shares ("New Ordinary Shares") in the Company to raise gross proceeds of approximately GBP100 million (the "Issue"), the details of which will be set out in the Prospectus, expected to be published by the Company later today. The Issue will comprise a Placing, Open Offer, Offer for Subscription and Intermediaries Offer.

The Company was launched as a closed-ended investment company in February 2017. The Company has successfully deployed the GBP544 million of equity and debt capital raised both on and since its IPO in February 2017 and, consequently, on 18 April 2019, the Company announced that it has been considering a further equity fundraise to fund further investments in line with its investment policy and with a view to delivering further value creation for its Shareholders.

Summary

-- Issue of up to 84,555,569 New Ordinary Shares pursuant to a Placing, Open Offer, Offer for Subscription and Intermediaries Offer, targeting gross proceeds of approximately GBP100 million

-- Qualifying Shareholders are being offered the opportunity to participate in the Open Offer on the basis of 6 New Ordinary Shares for every 25 Existing Ordinary Shares

-- Qualifying Shareholders are also being offered the opportunity to subscribe for New Ordinary Shares in addition to their Open Offer Entitlement under the Excess Application Facility

-- The Board have reserved the right to increase the size of the Issue by up to 84,555,569 New Ordinary Shares

-- The Issue Price is 118 pence per New Ordinary Share. This represents a premium of 3 per cent. to the audited Net Asset Value per Ordinary Share as at 31 March 2019 of 114.6 pence per Ordinary Share

-- The Issue Price represents a discount of 9.5 per cent. to the closing price per Ordinary Share on 17 May 2019 of 130.4 pence per Ordinary Share

-- The Company will be subject to a 90 day lock-up on the issue of further Ordinary Shares from the date of Admission, subject to waiver by the Bookrunner

-- The Investment Advisor, on behalf of the Company, has identified a significant pipeline of additional assets which meet the Company's investment objective and investment policy, including off-market assets identified through the Investment Advisor's extensive contacts and relationships

-- The pipeline assets, which total over GBP200 million in value, are diversified by location and leased to a range of institutional-grade tenants with strong financial covenants, with 98% of rents containing either inflation-linked or fixed uplift reviews, and with a good mix within the pipeline of built assets and forward funded structures. They benefit from a long weighted average unexpired lease term to first break of 25 years and a blended net initial yield of 5.6 per cent. and are structured as both pre-let forward funding and standing investments

-- Although there can be no assurance that any of these properties will be purchased by the Company, the Investment Advisor is confident that it will substantially invest or commit the net proceeds resulting from the proposed Issue within three months following Admission

-- As also announced today, the Company is now targeting a dividend of 5.75 pence per Ordinary Share for the year ending March 2020(1) (an increase of 4.5 per cent. from the previous target of 5.50 pence per Ordinary Share)

   --      The results of the Issue are expected to be announced on 13 June 2019 

Applications will be made to the Financial Conduct Authority and the London Stock Exchange for all of the New Ordinary Shares to be issued pursuant to the Issue to be admitted to the premium listing segment of the Official List and to trading on the Main Market. It is expected that Admission will become effective and dealings in the New Ordinary Shares will commence at 8.00 a.m. on 17 June 2019.

Terms not otherwise defined in this announcement have the meanings that will be given to them in the Prospectus. This summary should be read in conjunction with the full text of the announcement and the Prospectus, when available.

LXi REIT will shortly be publishing a Prospectus in connection with the Issue and a circular (the "Circular") to convene a General Meeting to approve certain matters necessary to implement the Issue. The Prospectus and Circular will, when published, be available, subject to certain access restrictions, on the Company's website (www.lxireit.com), at the Company's registered office at Mermaid House, 2 Puddle Dock, London EC4V 3DB, and at the National Storage Mechanism via www.morningstar.co.uk/uk/NSM.

Background to, and reasons for, the Issue

As stated above, the Company has successfully deployed the GBP544 million of equity and debt capital raised on and since its IPO in February 2017 and, consequently, has been considering a further equity raise to fund further investments in line with its investment policy and objective and with a view to delivering further value for its Shareholders.

The Investment Advisor, on behalf of the Company, has identified a significant pipeline of additional assets which meet the Company's investment policy and objective, including off-market assets identified through the Investment Advisor's extensive contacts and relationships.

The Investment Advisor has already commenced negotiations and discussions concerning the acquisition of such assets for the Company. Furthermore, the Investment Advisor has entered into exclusivity agreements on behalf of the Company in relation to the acquisition of a number of assets.

These assets are diversified by location and leased to a range of institutional-grade tenants with strong financial covenants, with rental uplifts linked to inflation and with a good mix within the pipeline of built assets and forward funded structures.

The assets, which total over GBP200 million in capital value, are diversified across a wide range of defensive and robust sub sectors. They benefit from a long weighted average unexpired lease term to first break of 25 years and a blended net initial yield of 5.6 per cent. (net of expected acquisition costs). 98 per cent. of the rents contain either inflation-linked or fixed uplifts.

These acquisitions are subject to on-going due diligence by the Investment Advisor and its professional advisers. The Company currently has no binding contractual obligations with potential vendors (other than assets on whch the Company had exchanged contracts to acquire but had not completed as at 31 March 2019, which will be funded using the Company's existing resources) and, although there can be no assurance that any of these properties will be purchased by the Company, the Investment Advisor is confident that it will substantially invest or commit the net proceeds resulting from the proposed Issue within three months following Admission.

Benefits of the Issue

The Board believes that the Issue will have the following benefits for the Company:

-- the additional assets forming the pipeline identified by the Investment Advisor, if acquired, are expected to be accretive and to further diversify the Company's portfolio of properties in terms of tenant, geographic and sector exposures;

-- raising new equity is expected to broaden the Company's investor base, and enhance the size and liquidity of the Company's share capital; and

-- growing the Company will spread the fixed operating costs over a larger capital base, thereby reducing the Company's ongoing charges ratio.

Overview of the Issue

The Company is targeting an issue of approximately GBP100 million (gross) or approximately GBP98 million (net of expenses) through the issue of 84,555,569 New Ordinary Shares pursuant to the Issue at the Issue Price of 118 pence per New Ordinary Share. If the overall demand exceeds this target the Directors have reserved the right, following consultation with Peel Hunt, to increase the size of the Issue to a maximum of approximately GBP200 million (gross). The actual number of New Ordinary Shares to be issued pursuant to the Issue, and therefore the Gross Issue Proceeds, are not known as at the date of this announcement but will be notified by the Company via a Regulatory Information Service prior to Admission. The Directors intend to use the net proceeds of the Issue to acquire investments in accordance with the Company's investment policy and objective, as more fully set out in the Prospectus.

The New Ordinary Shares will, following Admission, rank pari passu in all respects with the Existing Ordinary Shares and will carry the right to receive all dividends and distributions declared, made or paid in respect of the Ordinary Shares by reference to a record date after Admission.

The Issue Price is calculated by reference to the NAV per Ordinary Share as at 31 March 2019 (audited) of 114.60 pence, reduced by the dividend of 1.375 pence per Ordinary Share announced on 20 May 2019 with a record date of 31 May 2019, in respect of the period from 1 January to 31 March 2019 and increased to reflect the costs and expenses of the Issue, which have been capped at 2 per cent. of the Gross Issue Proceeds. Holders of New Ordinary Shares will not be entitled to receive any dividends declared with a record date prior to the date of their issue (please see further details below, including with regards to the first interim dividend for the year to 31 March 2020).

Placing

Peel Hunt has agreed to use its reasonable endeavours to procure subscribers pursuant to the Placing for the New Ordinary Shares. The terms and conditions which shall apply to any subscription for New Ordinary Shares pursuant to the Placing are set out more fully in the Prospectus.

Open Offer

New Ordinary Shares are being offered to Qualifying Shareholders by way of the Open Offer. The Open Offer provides an opportunity for Qualifying Shareholders to participate in the fundraising by subscribing for their Open Offer Entitlements, being 6 New Ordinary Shares for every 25 Existing Ordinary Shares held and registered in their name at the Record Date.

If the Issue proceeds, valid applications under the Open Offer will be satisfied in full up to applicants' Open Offer Entitlements. Any New Ordinary Shares not taken up under the Open Offer will be made available under the Excess Application Facility, the Placing, the Offer for Subscription and the Intermediaries Offer. Open Offer Entitlements will be rounded down to the nearest whole number and any fractional entitlements to New Ordinary Shares will be disregarded in calculating Open Offer Entitlements. Fractions will be aggregated and made available to Qualifying Shareholders under the Excess Application Facility. Qualifying Shareholders who wish to subscribe for more New Ordinary Shares than their Open Offer Entitlement could make an application under the Excess Application Facility, the Offer for Subscription, the Intermediaries Offer or, if appropriate, the Placing. Shareholders should be aware that the Open Offer is not a rights issue and Open Offer Entitlements cannot be traded.

The latest time and date for receipt of completed Open Offer Application Forms and payment in full under the Open Offer and settlement of relevant instructions (as appropriate) is expected to be 11.00 a.m. on 12 June 2019 with admission and commencement of dealings in New Ordinary Shares expected to take place at 8.00 a.m. on 17 June 2019.

Further details as to how Shareholders can apply for New Ordinary Shares are set out in the Prospectus. Shareholders should not subscribe for or purchase any New Ordinary Shares except on the basis of information set out in the Prospectus.

Offer for Subscription

The Directors are also proposing to offer New Ordinary Shares under the Offer for Subscription, subject to the terms and conditions set out in the Prospectus. The Offer for Subscription is being made available in the United Kingdom, Guernsey, Jersey and the Isle of Man. Individual applications must be for a minimum subscription of 1,000 New Ordinary Shares and then in multiples of 1,000 New Ordinary Shares thereafter, although the Board has discretion to accept applications below these minimum amounts. Multiple subscriptions under the Offer for Subscription by individual investors will not be accepted.

Intermediaries Offer

Prospective investors may also subscribe for New Ordinary Shares pursuant to the Intermediaries Offer. Only the Intermediaries' retail investor clients in the United Kingdom, Guernsey, Jersey and the Isle of Man are eligible to participate in the Intermediaries Offer. Investors may apply to any one of the Intermediaries to be accepted as their client.

No New Ordinary Shares allocated under the Intermediaries Offer will be registered in the name of any person whose registered address is outside the United Kingdom, the Channel Islands or the Isle of Man. A minimum application of 1,000 New Ordinary Shares per Underlying Applicant will apply. Allocations to Intermediaries will be determined solely by the Company (following consultation with Peel Hunt, in its capacity as intermediaries offer adviser).

Scaling back and allocation

The Directors have reserved the right, following consultation with Peel Hunt, to increase the size of the Issue by up to 84,555,569 New Ordinary Shares if overall demand exceeds 84,555,569 New Ordinary Shares.

In the event that commitments under the Issue exceed the maximum number of New Ordinary Shares available, applications under the Issue (other than applications up to Qualifying Investors' full entitlement under the Open Offer) will be scaled back at the Company's discretion in consultation with Peel Hunt. The basis of allocation of New Ordinary Shares under the Issue will be:

(i) to each Qualifying Shareholder who applies, up to his full entitlement under the Open Offer (New Ordinary Shares issued to Qualifying Shareholders under the Open Offer are not subject to scaling back to satisfy valid applications under the Placing, the Offer for Subscription or the Intermediaries Offer);

(ii) any New Ordinary Shares not taken up under the Open Offer, to applicants under the Placing, the Offer for Subscription, the Intermediaries Offer and the Excess Application Facility, with applications scaled back at the discretion of the Company following consultation with Peel Hunt.

There will be no priority given to applications under the Placing, applications under the Offer for Subscription, applications under the Intermediaries Offer or applications under the Excess Application Facility pursuant to the Issue.

Dilution

Assuming 84,555,569 New Ordinary Shares are issued pursuant to the Issue:

-- Qualifying Shareholders who take up their full Open Offer Entitlement (excluding any New Ordinary Shares acquired through the Excess Application Facility) will not suffer any dilution to their ownership and voting interests in the Company by virtue of the issue of New Ordinary Shares pursuant to the Issue;

-- Qualifying Shareholders who do not take up any of their Open Offer Entitlement and Shareholders who are not eligible to participate in the Open Offer, will suffer a maximum dilution of approximately 19.4 per cent. to their ownership and voting interests in the Company by virtue of the issue of New Ordinary Shares pursuant to the Issue; and

-- the New Ordinary Shares will represent approximately 19.4 per cent. of the Enlarged Share Capital.

In the event that the Directors exercise their right to increase the size of the Issue up to 169,111,138 New Ordinary Shares:

-- Qualifying Shareholders who take up their full Open Offer Entitlement (excluding any New Ordinary Shares acquired through the Excess Application Facility) will suffer a maximum dilution of 16.2 per cent. to their ownership and voting interests in the Company by virtue of the issue of New Ordinary Shares pursuant to the Issue;

-- Qualifying Shareholders who do not take up any of their Open Offer Entitlement and Shareholders who are not eligible to participate in the Open Offer, will suffer a maximum dilution of approximately 32.4 per cent. to their ownership and voting interests in the Company by virtue of the issue of New Ordinary Shares pursuant to the Issue; and

-- the New Ordinary Shares will represent approximately 32.4 per cent. of the Enlarged Share Capital.

New Ordinary Shares

The Directors have considered the potential impact of the Issue on the payment of dividends to existing holders of Ordinary Shares and will take steps to ensure that it will not result in any material dilution of the dividends attributable to existing Shareholders. Holders of New Ordinary Shares will not be entitled to receive any dividends declared with a record date prior to the date of their issue. Whilst the Directors ordinarily seek to pay dividends quarterly, the Directors currently intend to declare a first interim dividend in line with the new dividend target for the year to 31 March 2020 in respect of a two-month period ending 31 May 2019 in an amount equal to one quarter of the new dividend target with a record date prior to the issue of the New Ordinary Shares. Accordingly, holders of New Ordinary Shares will not be entitled to receive the final interim dividend in respect of the period to 31 March 2019 nor the dividend intended to be paid in respect of the two-month period to 31 May 2019, should one be declared. Subsequently, it is the current intention of the Directors to declare three further equal interim dividends in respect of the periods to 30 September 2019, 31 December 2019 and 31 March 2020, each with a record

date after the issue of the New Ordinary Shares.

Authority to allot the New Ordinary Shares pursuant to the Issue

Pursuant to the requirements of the Companies Act, Shareholders are being asked to approve the following Issue Resolutions:

-- Resolution 1 (which will be proposed as an ordinary resolution) to grant the Directors authority to allot up to 169,111,138 New Ordinary Shares (representing approximately 48 per cent. of the issued share capital (excluding treasury shares) of the Company at the date of this announcement) pursuant to the Issue. If approved, this authority will lapse immediately following Admission; and

-- Resolution 2 (which will be proposed as a special resolution and which is conditional on the passing of Resolution 1) to grant the Directors authority to allot up to 169,111,138 New Ordinary Shares (representing approximately 48 per cent. of the issued share capital of the Company at the date of this announcement) on a non-pre-emptive basis. If approved, this authority will lapse immediately following Admission.

The Issue is conditional on the passing of both of the Issue Resolutions at the General Meeting.

An ordinary resolution requires a simple majority of members entitled to vote and present in person or by proxy to vote in favour in order for it to be passed. A special resolution requires a majority of at least 75 per cent. of members entitled to vote and present in person or by proxy to vote in favour in order for it to be passed.

Applications will be made to the Financial Conduct Authority and the London Stock Exchange for all of the New Ordinary Shares to be issued pursuant to the Issue to be admitted to the premium listing segment of the Official List and to trading on the Main Market. It is expected that Admission will become effective and dealings in the New Ordinary Shares will commence at 8.00 a.m. on 17 June 2019.

Treasury shares

No Ordinary Shares were held in treasury at the date of this announcement.

CREST

The New Ordinary Shares will be issued in registered form. CREST is a paperless settlement procedure enabling securities to be evidenced otherwise than by a certificate and transferred otherwise than by written instrument. The Articles permit the holding of shares under the CREST system. Settlement of transactions in the New Ordinary Shares may take place within the CREST system if any Shareholder so wishes. CREST is a voluntary system and Shareholders who wish to receive and retain share certificates will be able to do so. Shareholders applying for New Ordinary Shares may elect to receive New Ordinary Shares in uncertificated form if such investor is a system-member (as defined in the CREST Regulations) in relation to CREST.

Costs of the Proposals

The total net proceeds of the Issue will depend on the level of subscriptions received pursuant to the Issue and the aggregate costs and expenses of the Issue. Such aggregate costs and expenses have been capped at 2 per cent. of the Gross Issue Proceeds.

For illustrative purposes only, assuming that 84,555,569 New Ordinary Shares are issued pursuant to the Issue at the Issue Price:

   --      the Gross Issue Proceeds are expected to be approximately GBP100 million; 
   --      the costs and expenses of the Issue are expected to be approximately GBP2 million; and 
   --      the net proceeds of the Issue are expected to be approximately GBP98 million. 

Considerations associated with the Proposals

Shareholders should have regard to the following when considering the Proposals:

-- The past performance of the Company or of the Investment Advisor is not necessarily indicative of likely future performance.

-- All existing Shareholders not participating in the Issue will be diluted. Assuming 84,555,569 New Ordinary Shares are issued pursuant to the Issue, Qualifying Shareholders who take up their full Open Offer Entitlement (excluding any New Ordinary Shares acquired through the Excess Application Facility) will not suffer any dilution to their ownership and voting interests in the Company by virtue of the issue of New Ordinary Shares pursuant to the Issue. In the event that the Directors exercise their right to increase the size of the Issue up to 169,111,138 New Ordinary Shares, Qualifying Shareholders who take up their full Open Offer Entitlement (excluding any New Ordinary Shares acquired through the Excess Application Facility) will suffer a maximum dilution of approximately 16.2 per cent. to their ownership and voting interests in the Company. Qualifying Shareholders who do not take up any of their Open Offer Entitlement and Shareholders who are not eligible to participate in the Open Offer, will suffer a maximum dilution of approximately 19.4 per cent. to their ownership and voting interests in the Company if 84,555,569 New Ordinary Shares are issued pursuant to the Issue and a maximum dilution of approximately 32.4 per cent. to their ownership and voting interests in the Company if 169,111,138 New Ordinary Shares are issued pursuant to the Issue.

-- The Company has not entered into any legally binding contractual arrangements to acquire any further properties from any potential vendors (other than assets on which the Company had exchanged contracts to acquire but had not completed as at 31 March 2019, which will be funded using the Company's existing resources). There can be no assurance as to how long it will take for the Company to invest the proceeds of the Issue. Even where the Company, acting on advice from the Investment Advisor, has identified and approved the acquisition of a property in line with its investment objective and investment policy it may encounter a number of delays before the property is finally acquired. The past performance of the Investment Advisor in terms of the speed of deployment of the GBP544 million of equity and debt raised on and since the Company's IPO cannot be taken as an indication of the speed of deployment of the Gross Issue Proceeds.

General Meeting

The Issue is conditional on the approval by Shareholders of the Issue Resolutions to be proposed at the General Meeting of the Company which has been convened for 9.15 a.m. on 12 June 2019.

All Shareholders are entitled to attend and vote at the General Meeting. In accordance with the Articles, all Shareholders present in person or by proxy shall upon a show of hands have one vote and upon a poll shall have one vote in respect of each Ordinary Share held. In order to ensure that a quorum is present at the General Meeting, it is necessary for two Shareholders entitled to vote to be present, whether in person or by proxy (or, if a corporation, by a representative).

The Company does not currently have any existing authority to issue Ordinary Shares. It is proposed that the authorities sought at the General Meeting, if approved, will lapse on Admission.

The formal notice convening the General Meeting is set out at the end of the Circular. The General Meeting will be held at the offices of Stephenson Harwood LLP, 1 Finsbury Circus, London EC2M 7SH.

Action to be taken in respect of the General Meeting

Whether or not Shareholders propose to attend the General Meeting, if they would like to vote on the Issue Resolutions they may vote:

   --      by logging on to www.signalshares.com and following the instructions; 
   --      by requesting a hard copy form of proxy directly from the registrars; or 
   --      in the case of CREST members, by utilising the CREST electronic proxy appointment service. 

In order for a proxy appointment to be valid, Shareholders should ensure that they have recorded proxy details with the Company's registrar, Link Asset Services, by 9.15 a.m. on 10 June 2019.

Recipients of the Circular who are the beneficial owners of Ordinary Shares held through a nominee should follow the instructions provided by their nominee or their professional adviser if no instructions have been provided.

Recommendation

The Board considers that the Proposals are in the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in favour of the Issue Resolutions to be proposed at the General Meeting. The Directors intend to vote in favour of the Issue Resolutions in respect of their holdings of Ordinary Shares; amounting to 393,168 Ordinary Shares in aggregate (representing approximately 0.11 per cent. of the issued share capital of the Company as at the date of this announcement).

Company Overview

   --      The Company's current portfolio: 

o has a long weighted average unexpired lease term to first break of 22 years, with 96% of its rental income being index-linked or containing fixed uplifts;

o was acquired at an attractive average net initial yield of 5.8%, which is 286 basis points above its cost of debt, through a mix of pre-let forward fundings and built asset acquisitions;

o is 100% let or pre-let to 38 institutional-grade tenants across nine sectors; and

o is leveraged at 29% LTV, with a weighted average of 12 years unexpired on the loan terms at a fixed average rate of 2.94% per annum

-- The Company has delivered an average annual shareholder return of 18.6% p.a. since IPO and a total shareholder return from IPO to 31 March 2019 of 38.8%

-- The Company delivered a 12.1% total NAV return in its financial year to March 2019 and a total NAV return of 25.2% over the period from IPO to March 2019. The Company has effected selective asset disposals generating an average geared IRR of 32% per annum

-- The Company is targeting a dividend of 5.75 pence per share for the year ending 31 March 2020 (an increase of 4.5% on the 2019 level)*

FOR FURTHER INFORMATION, PLEASE CONTACT:

 
 LXI REIT Advisors Limited               Via Maitland/AMO 
  John White 
  Simon Lee 
  Jamie Beale 
 
 Peel Hunt LLP (Sole Sponsor, Broker,    Tel: [phone] 
  Bookrunner and Intermediaries Offer 
  Adviser) 
  Luke Simpson / Liz Yong (Corporate 
  Broking) 
  Mark Thompson (Sales) 
  Sohail Akbar (Intermediaries) 
                                        ---------------------------------------- 
 
 Maitland/AMO (Communications Adviser)   Tel: [phone] 
  James Benjamin                          Email: [e-mail] 
                                        ---------------------------------------- 
 

The Company's LEI is: 2138008YZGXOKAXQVI45

NOTES:

LXi REIT plc invests in UK commercial property assets let, or pre-let, on very long (typically 20 to 30 years to first break), inflation-linked leases to a wide range of strong tenant covenants across a diverse range of robust property sectors.

The Company may invest in fixed-price forward funded developments, provided they are pre-let to an acceptable tenant and full planning permission is in place. The Company will not undertake any direct development activity nor assume direct development risk.

The Company is targeting an annual dividend of 5.75 pence per ordinary share, starting from the financial period commencing 1 April 2019, with the potential to grow the dividend in absolute terms through upward-only inflation-protected long-term lease agreements, and is targeting a total NAV return of a minimum of 8 per cent. per annum over the medium term.*

The Company, a real estate investment trust ("REIT") incorporated in England and Wales, is listed on the premium listing segment of the Official List of the Financial Conduct Authority and was admitted to trading on the main market for listed securities of the London Stock Exchange in February 2017. The Company is a constituent of the FTSE EPRA/NAREIT index.

Further information on the Company is available at www.lxireit.com

* These are targets only and not a profit forecast and there can be no assurance that they will be met.

EXPECTED TIMETABLE

 
                                                                      2019 
 Record Date for entitlements under            close of business on 16 May 
  the Open Offer                                                    20 May 
  Posting of the Circular and the Notice 
  of General Meeting 
 Prospectus published and Issue opens                               20 May 
 Ex entitlement date for the Open                                   20 May 
  Offer 
  Open Offer Entitlements and Excess                                21 May 
  CREST Open Offer Entitlements enabled 
  in CREST and credited to stock accounts              4.30 p.m. on 6 June 
  of Qualifying CREST Shareholders 
  Recommended latest time and date                     3.00 p.m. on 7 June 
  for requesting withdrawal of Open 
  Offer Entitlements and Excess Open                  9.15 a.m. on 10 June 
  Offer Entitlements from CREST 
  Recommended latest time and date                    3.00 p.m. on 10 June 
  for depositing Open Offer Entitlements 
  and Excess Open Offer Entitlements 
  into CREST 
  Latest time and date for receipt 
  of proxy appointments for use at 
  the General Meeting 
  Recommended latest time for splitting 
  Open Offer Application Forms (to 
  satisfy bona fide market claims only) 
 General Meeting                                      9.15 a.m. on 12 June 
 Announcement of the results of the                                12 June 
  General Meeting through a Regulatory 
  Information Service 
 Latest time and date for receipt                    11.00 a.m. on 12 June 
  of completed Open Offer Application 
  Forms and payment in full under the 
  Open Offer or settlement of relevant 
  CREST instructions 
 Latest time and date for receipt                     1.00 p.m. on 12 June 
  of completed Offer for Subscription 
  Application Forms and, if applicable, 
  Tax Residency Self-Certification 
  Forms, and payment in full under 
  the Offer for Subscription 
 Latest time and date for receipt                     3.00 p.m. on 12 June 
  of completed applications from the 
  Intermediaries in respect of the 
  Intermediaries Offer 
 Latest time and date for commitments                 5.00 p.m. on 12 June 
  under the Placing 
 Issue closes                                                      12 June 
 Announcement of the results of the                                13 June 
  Issue 
 Admission and dealings in New Ordinary               8.00 a.m. on 17 June 
  Shares commence 
 CREST accounts credited with uncertificated                       17 June 
  New Ordinary Shares 
 Where applicable, definitive share                                24 June 
  certificates despatched by post in 
  the week commencing** 
 

** Underlying applicants who apply to Intermediaries for New Ordinary Shares under the Intermediaries Offer will not receive share certificates

The above times and/or dates may be subject to change and, in the event of such change, the revised times and/or dates will be notified to Shareholders by an announcement through a Regulatory Information Service.

All references to times in this announcement are to London times.

About the AIFM and LXI REIT Advisors Limited

The Company and LJ Administration (UK) Limited (acting as the AIFM, the "AIFM") appointed LXI REIT Advisors Limited as the Company's Investment Advisor pursuant to an investment advisory agreement.

The AIFM is regulated in the conduct of investment business by the FCA. The AIFM is, for the purposes of the AIFMD and the rules of the FCA, a "full scope" UK AIFM with a Part 4A permission for managing AIFs, such as the Company.

LXI REIT Advisors was appointed to provide certain services in relation to the Company's portfolio, including sourcing investments for acquisition by the Company and due diligence in relation to proposed investments. LJ Administration (UK) Limited is owned by Alvarium Investments Limited (formerly LJ Partnership). Alvarium was established in 2009 and has grown to become a substantial, international multi-family office and asset manager, supervising in excess of US$15 billion of assets, for families, private individuals and institutions. It has over 200 employees and 10 offices around the world.

The key individuals responsible for executing the Company's investment strategy are (they also have access to members of the wider Osprey and Alvarium teams):

John White

John entered the commercial property market in 1987 and after qualifying as a chartered surveyor at Allsops moved to the investment team at Cushman & Wakefield. There he became a partner and spent the next 18 years advising a range of institutional investor clients on their UK acquisitions and disposals across the full range of real estate sub-sectors including retail (in and out of town), offices (London, Thames Valley and regional cities), logistics, and alternatives. John moved into private equity real estate in 2007 and co-founded Osprey Equity Partners in 2011 and LXi REIT Advisors Limited in 2016.

Simon Lee

Simon trained and practised as a solicitor at City law firm, Slaughter and May, from 1999 to 2006, following which he spent the next 10 years in private equity real estate, co-founding Osprey Equity Partners in 2011 and LXi REIT Advisors Limited in 2016. Simon's role covers a wide range of areas, including formulating Osprey's investment strategies and products, raising equity and debt finance, asset selection, and negotiating and implementing transactions with vendors, purchasers, developers, investors, lenders and joint venture partners.

Freddie Brooks

Freddie trained and qualified as a chartered accountant in BDO LLP's Real Estate and Construction team, gaining significant experience in the sector, working with similar listed vehicles, private property funds, developers and a number of the UK's top contractors. Freddie worked with LXi REIT since the Company's IPO whilst at BDO, before joining the LXi REIT Advisors management team full time in early 2018. Freddie's role covers all historical and strategic financial matters including annual and interim reporting, budgeting and forecasting, treasury management and the monitoring of internal controls.

Jamie Beale

Jamie has significant transaction management experience in the long income and forward funding real estate space. Prior to joining the Investment Advisor, Jamie spent five years in the city as a real estate lawyer where he acted for leading developers and property funds on a variety of deals, ranging from large scale residential developments to substantial commercial property transactions.

Directors of the Company

The Directors are as follows:

Stephen Hubbard, Non-Executive Chairman

Stephen Hubbard serves as Chairman of UK CBRE Group, the world's largest property advisory firm. He joined Richard Ellis in 1976 and served as Head of EMEA and UK Capital Markets from 1998 to 2012. He is also a member of the Advisory Board for Redevco which is a pan-European property holding company and a director of Cockwells Modern and Classic Boatbuilding Ltd. Stephen has also been a non-executive director of Workspace Group plc since July 2014

Colin Smith OBE, Non-Executive Director

Colin Smith OBE served for ten years as Chairman of Poundland Group Holdings, Europe's largest single price discount retailer. Prior to this, he was Chief Executive and Finance Director of Safeway Plc, the national supermarket retailer. Colin served as Chairman of Hilton Food Group plc between 2016 and 2018, having previously served as a non-executive director since 2010. He also has experience in the not for profit sector, formerly serving as Chairman of The Challenge Network, as a trustee of Save the Children and as Chairman of the food industry sponsored Red Tractor assurance scheme.

Jan Etherden, Non-Executive Director

Jan Etherden has over 35 years' experience in the investment industry, as an analyst, fund manager, then a non-executive director. Previously head of UK equities for Confederation Life/Sun Life of Canada, she joined Newton in 1996 as a director specialising in multi-asset segregated portfolios and also was their Investment COO from 1999 to 2001. Subsequently she worked with Olympus Capital Management as business development manager for specialist hedge fund products. She was a director of Ruffer Investment Company Ltd until November 2016, a director of TwentyFour Income Fund until March 2019 and is currently a director of Miton UK MicroCap Trust plc.

John Cartwright, Non-Executive Director

John Cartwright is Chief Executive of The Association of Real Estate Funds (AREF), a post he has held since late 2009. His responsibilities are to represent and promote the interests of members, promote best practice in fund governance and ensure the smooth running of the association. Prior to this, John was with M&G Real Estate (formerly PRUPIM) for nearly 35 years in a variety of roles; latterly as Head of Institutional and Retail Funds and a member of PRUPIM's Board and Investment Committee. He has more than 20 years' experience of managing pooled and segregated accounts for both retail and institutional investors. John is also a member of the Investment Committee of Lothbury Property Trust and a Fellow of the Royal Institution of Chartered Surveyors.

Disclaimer

This announcement is an advertisement and does not constitute a prospectus and investors must subscribe for or purchase any shares referred to in this announcement only on the basis of information contained in the Prospectus expected to be published by the Company shortly and not in reliance on this announcement. Copies of the Prospectus may, subject to any applicable law, be obtained from the registered office of the Company and at the National Storage Mechanism at http://www.morningstar.co.uk/NSM and on the Company's website. This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase investments of any description or a recommendation regarding the issue or the provision of investment advice by any party. No information set out in this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase shares in the Company.

This is a financial promotion and is not intended to be investment advice. The content of this announcement, which has been prepared by and is the sole responsibility of the Company, has been approved by LJ Administration (UK) Limited, which is authorised and regulated by the Financial Conduct Authority, solely for the purposes of section 21(2)(b) of the Financial Services and Markets Act 2000 (as amended).

This announcement is not for release, publication or distribution, directly or indirectly, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia, collectively, the "United States"), Australia, Canada, the Republic of South Africa, Japan or any other jurisdiction where such distribution is unlawful. This announcement is not an offer of securities for sale in or into the United States. The New Ordinary Shares have not been, and will not be, registered under the US Securities Act 1933, as amended (the "US Securities Act"), or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold into or within the United States, absent registration under, or except pursuant to an exemption from the registration requirements of, the US Securities Act, and in compliance with any applicable securities laws of any state or other jurisdiction in the United States. No public offering of securiteis is being made in the United States.

In addition the Company has not been and will not be registered under the US Investment Company Act of 1940, as amended.

The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Peel Hunt LLP ("Peel Hunt"), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for the Company and for no-one else in connection with the Issue and Admission and the other arrangements referred to in this announcement and will not regard any other person as its client in relation to the Issue and Admission and the other arrangements referred to in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to its clients, nor for providing advice in connection with the Issue and the other arrangements referred to in this announcement.

The value of shares and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. Figures refer to past performance and past performance is not a reliable indicator of future results. Returns may increase or decrease as a result of currency fluctuations.

This announcement contains forward looking statements, including, without limitation, statements including the words "believes", "estimates", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. Such forward looking statements involve unknown risks, uncertainties and other factors which may cause the actual results, financial condition, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

These forward-looking statements speak only as at the date of this announcement and cannot be relied upon as a guide to future performance. The Company, the Investment Advisor, the AIFM and Peel Hunt expressly disclaim any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the assumptions, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Prospectus Rules of the Financial Conduct Authority, the EU Market Abuse Regulation or other applicable laws, regulations or rules.

The information in this announcement is for background purposes only and does not purport to be full or complete. None of Peel Hunt, or any of its respective affiliates, accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of the announcement or its contents or otherwise arising in connection therewith. Peel Hunt, and its affiliates, accordingly disclaim all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or its contents or otherwise arising in connection therewith.

In connection with the Issue, Peel Hunt, and any of its affiliates, may take up a portion of the New Ordinary Shares in the Issue as a principal position and in that capacity may retain, purchase, sell, offer to sell for their own accounts such New Ordinary Shares and other securities of the Company or related investments in connection with the Issue or otherwise. Accordingly, references in the Prospectus, once published, to the New Ordinary Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, Peel Hunt and any of its affiliates acting in such capacity. In addition Peel Hunt, and any of its affiliates may enter into financing arrangements (including swaps or contracts for differences) with investors in connection with which Peel Hunt, and any of its affiliates may from time to time acquire, hold or dispose of Ordinary Shares. Peel Hunt does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the New Ordinary Shares have been subject to a product approval process, which has determined that such securities are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment"). Notwithstanding the Target Market Assessment, distributors (such term to have the same meaning as in the MiFID II Product Governance Requirements) should note that: the market price of the New Ordinary Shares may decline and investors could lose

all or part of their investment; the New Ordinary Shares offer no guaranteed income and no capital protection; and an investment in the New Ordinary Shares is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Issue. Furthermore, it is noted that, notwithstanding the Target Market Assessment, Peel Hunt will only procure investors (pursuant to the Placing) who meet the criteria of professional clients and eligible counterparties. For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the New Ordinary Shares. Each distributor is responsible for undertaking its own target market assessment in respect of the New Ordinary Shares and determining appropriate distribution channels.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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May 20, 2019 02:00 ET (06:00 GMT)