London-listed Long income REIT, LXi, has inked nine acquisitions worth £87 mln (€104 mln), funded by its recent £250 mln equity capital raise.
The deals, featuring assets situated across the UK, were transacted predominantly on an off-market basis with seven different vendors/developers. The acqusitions reflect an accretive 5.1% net initial yield (net of purchase costs), versus the current portfolio valuation yield of 4.5%.
The assets are secured to a wide range of strong tenant covenants on long-term, index-linked leases and are underpinned by robust sectors and affordable rents with strong rent cover, according to LXi.
The deals include three Co-op convenience stores in Norwich, Aston and Washington, all benefitting from new, unbroken 20-year leases with fixed rental uplifts of 2.5% per annum compounded every five years.
The properties occupy strong catchment areas and each have a strong trading history; they have recently been refurbished to Co-op’s latest trading format.
The other deals include a premium health club, the David Lloyd Club in Hamilton, near Glasgow, covering 100,000 ft2 (9,300 m2) of space and including 333 parking spaces, a pool and various studios, courts and spa and beauty facilities. The property is fully let to David Lloyd Leisure Limited with 25 years unexpired until first break.
The passing rent is a low £6.70 per ft2 and increases annually in line with RPI inflation, capped at 4% per annum.
The company has also acquired a two-storey Q-Park car park incorporating 385 spaces in York, leased with 21 years unexpired to first break. The rent increases annually in line with RPI inflation, capped at 4% per annum and collared at 2.5% per annum.
According to LXi, the car park trades strongly and occupies a central location in the affluent and historic city of York, with the benefit of multiple demand drivers, including tourism, leisure and the university.
The other deals include the forward-funding of a new Sainsbury's in Bewdley, pre-let on a new unbroken 15-year lease, plus a 44-bedroom Premier Inn budget hotel in Exeter. The latter is let to Whitbread with 16 years unexpired to first break.
A Compass training facility in Milton Keynes and the sale-and-leaseback of a Cazoo car storage and repair and maintenance facility in Edinburgh complete the acquisitions; both acquired with 20 years remaining on each lease.
