LXi REIT has confirmed that it has exchanged contracts to acquire a portfolio of 18 grocery stores in Southern England from the UK supermarket group Sainsbury’s for £500m (€572 mln) under a sale and leaseback agreement.
The purchase price equates to a net initial acquisition yield of 5%, which is accretive to the Company’s portfolio yield of 4.7%, LXi said in a statement.
The portfolio benefits from defensive characteristics including strong trading performance, low and sustainable rents (averaging £17.25 per sq ft), new 15-year lease terms, five yearly upward only CPI inflation-linked rent reviews (capped at 4% per annum compounded) and attractive ‘green’ lease provisions. The portfolio comprises modern buildings all with strong ESG credentials including A or B EPC ratings, on large plots with low site cover, and providing omni-channel sales optionality.
Completion of the acquisition is conditional upon LXi raising the necessary equity funding, for which the company is currently in discussions with investors. The balance of the purchase price will be funded via a debt facility, which is anticipated to be drawn at an accretive and attractive, low all-in maximum rate of 1.5% per annum.
News of the transaction comes three months after LXi REIT told PropertyEU in an interview that it was eyeing bigger forward funding and sale and leaseback transactions. Subscribers can read the interview here.
