UK REIT LXi has announced the off-market sale and leaseback acquisition of a portfolio of 23 nursery schools in England for a total cost of £34 mln (€40 mln), reflecting an accretive 5.5% net initial yield.
The nurseries have been acquired from and leased back to KidsFoundation, one of Europe’s major providers of education and care services for children, with over 900 educational facilities across the UK and northern Europe.
Each property benefits from a new, unbroken 30-year lease to the top entity within the KidsFoundation group. The rent increases on an annual basis in line with RPI inflation until 2030, from which date the reviews convert to CPIH inflation plus 0.83% per annum.
The transaction reflects the tenant’s ambition to further grow and invest in its UK business, with a continued drive to provide the highest quality early childhood education and care.
This acquisition - LXi's first transaction in the nursery school sector - deploys the balance of the equity proceeds of the company’s £100 million placing in July this year
John White, partner, LXI REIT Advisors commented: 'We are delighted to have made this first, substantial sale and leaseback acquisition for the Company in the robust nursery school sector. The portfolio provides LXI with highly secure, inflation-linked and diversified 30-year cashflows, supported by sustainable rents and strong residual values.'
