UK commercial real estate specialist LXi REIT has acquired a long-let grocery property valued at £58.9 mln (€70 mln) in Middlesbrough, UK.
The asset, purchased in a share and cash deal, was acquired from Spanish investment firm Laxmi Nivaria. The deal represents a net initial yield of 4.9%, expected to rise to 5.7% at the next inflation-linked rent review in 2025.
The property comprises 127,000 ft2 (11,800 m2) of built area, along with 850 car parking spaces and petrol filling station, on a substantial freehold site that extends to 16 acres.
The asset is fully let to Sainsbury's Supermarkets Limited, with 19 years unexpired to first break. The rent increases five yearly in line with RPI inflation, collared at 1% pa and capped at 4% per annum.
The property includes offerings from Argos (part of the Sainsbury's group), along with The Food Warehouse (part of the Iceland Foods group), B&M, KFC and Costa, who have sub-let the space from Sainsbury's. The asset benefits from online connectivity through both click and collect and home delivery.
LXi said that given its size, location and nature, the property provided good opportunities for asset management and ESG initiatives to enhance income and capital returns. Interventions could include adding further drive-thru units, EV charging points and solar panelling.
The property is located in a prominent position to the east of Middlesbrough town centre, directly adjacent to the busy A66 and accessed by an all movements junction.
Simon Lee, Fund Manager, LXI REIT Advisers said: 'We are pleased to acquire this well-let asset underpinned by a long, inflation-linked lease to a FTSE 100 company, with good asset management opportunities to enhance income and capital returns.
'The consideration predominantly takes the form of the issue of new shares in the company at a material premium to NAV, which further enhances the accretive nature of the transaction.'
