LXI.L Share News (LXI)

(Sharecast News) - LXi REIT updated the market on its balance sheet and portfolio on Friday, saying that while it was "too early" to quantify the potential impacts of the Covid-19 coronavirus pandemic, it was "well-placed" to navigate a prolonged period of uncertainty, and to mitigate the associated risks.
The FTSE 250 real estate investment trust said that to date, it had not been directly impacted by the pandemic, adding that it "drew comfort" from its "robust" balance sheet and "high-quality" portfolio of defensive commercial property assets, let or pre-let on very long term, index-linked leases to a range of strong tenant covenants, diversified by tenant, sector and location.

It said the health and safety of its colleagues, tenants, shareholders and wider stakeholders was its top priority, particularly during the period of uncertainty and volatility, with the group continuing to monitor the recommendations issued by the World Health Organisation, Public Health England, the NHS and other relevant authorities.

"The group remains in constant communication with all its staff, tenants and key service providers and, as part of its business continuity procedures, the company has a pandemic response plan in place which includes travel restrictions and remote working policies," LXi said in its statement.

The company said its debt was currently at 20% loan-to-value, with no short or medium term refinancing risk given the 12-year unexpired average duration of its long-term debt facilities with Scottish Widows, which was fully fixed at an all-in average rate of 2.94% per annum.

That, LXi said, provided "significant" headroom to its covenant of 50% and, similarly, the interest cover was around 600%, compared to the interest cover test of 300%.

The firm said it also had a committed ?100m revolving credit facility with Lloyds Bank, which remained entirely undrawn.

Looking at its portfolio, LXi noted that it was 100% let or pre-let to more than 50 "strong" tenants across nine sub-sectors.

Further security was provided through the tenants and guarantors being the main trading or parent companies within the tenant groups.

LXi's leases averaged 22 years to first break, with each lease drawn on a fully repairing and insuring basis, with tenants responsible for repair, maintenance and outgoings, meaning there was no cost leakage for the company.

Each property was also let on a fixed rent basis, so it was not related to turnover or trading, with 96% of the income benefitting from index-linked or fixed uplifts.

"The company's portfolio benefits from low, sustainable rents, making the assets highly profitable and valuable to our tenants," LXi explained.

"This is in part a consequence of the company forward funding, on a pre-let basis, brand new buildings and carefully structuring sale and leasebacks."

A number of LXi's tenants, such as Aldi, Lidl and Bupa, were in sectors which were trading "more robustly" in the current climate.

In the sectors which Covid-19 had spot-lit, such as budget hotels, pubs and drive-through coffee outlets, the firm's tenants, including Premier Inn, Travelodge, Greene King, Costa Coffee and Starbucks, were described as "financially robust", with strong balance sheets and material cash holdings.

"The company will continue to keep shareholders and wider stakeholders updated and informed as the situation evolves."

At 1213 GMT, shares in LXi REIT were up 13.11% at 101.8p.