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(Alliance News) - LXi Reit PLC on Thursday said that for GBP19 million it will acquire a fourth garden centre, a 94,000 square foot site in Reading.
The London-based real estate investment trust said that the Reading purchase offers a 5.3% net initial yield. The purchase will be funded through the company's revolving credit facility. Following this acquisition, LXi Reit will have committed GBP170 million since the company's March capital raise of GBP125 million across 13 separate transactions.
The site is pre-let to Lasswade, Scotland-based Dobbies Garden Centres Ltd. Dobbies has agreed to a 35-year lease with no break rights. Rent has been set at a "low and sustainable level" with annual rises of 1% over the consumer price index. The agreement includes a minimum annual rent rise of 1.5% and a 4% cap.
A new development, with a number of sustainable features, will replace a small garden centre currently standing on the 7 acre site. Dobbies will provide home delivery and a click and collect service to connect with customers from nearby Shinfield, Reading, which has an catchment population of 1.1 million, including many affluent areas.
LXi Reit now owns four long-let garden centres. LXi Reit said that the "flexible planning consent" offered by garden centres, which allows them to sell a wide range of products including food, and their classification as essential retail during the pandemic have made them attractive investments.
The company notes an "extremely successful" joint venture between Dobbies and J Sainsbury PLC, which will allow the new centre to sell 3,000 Sainsbury's products in the new centre.
LXi Reit will continue to earn income from the investment during the construction period, which is scheduled to conclude in spring 2022.
LXi Reit shares were trading up 0.8% at 146.36 pence each in London on Thursday morning.
By Scarlett Butler; scarlettbutler@alliancenews.com
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