LXI REIT makes 7 long income acquisitions in the grocery sector

(Sharecast News) - LXI REIT said on Monday that it has made seven separate long income acquisitions in the grocery sector from six different developers for £85m, following its £125m capital raise earlier in the month.
The acquisitions comprise both pre-let forward fundings and built investments, "secured to strong tenant covenants in the structurally supported grocery sector", it said.

They benefit from an accretive average net initial yield of 5.25%, net of acquisition costs and a long average unexpired lease term to first break of 19 years. LIX said they are let on sustainable, low rents and 100% of the income is inflation-linked via contractual rental uplifts.

The acquisitions represent about 70% of the net proceeds of the recent capital raise, which LXI said demonstrates the company's "ability to execute on identified investment opportunities efficiently and in short order".

Simon Lee, partner at LXI REIT Advisors, said: "Our focus on smaller lot-sized forward fundings and relationship driven deals with developers and tenants has ensured attractive entry pricing for these assets, despite them being in a much sought-after sector where the investment market is becoming increasingly competitive.

"We continue to believe that right-sized, well positioned grocery real estate assets let on sustainable rents to financially robust tenants, who are benefitting from flexible and proven operating models, and offering us as landlords very long, index linked, lease terms, remain attractive investments."

He added that after these acquisitions, foodstores will be LXI's largest sector exposure, at about 25% of the portfolio by value.