LXi REIT sees growth across sub-sectors in first half

(Sharecast News) - LXi REIT reported a total net asset value return of 9% for its first half on Wednesday, swinging from a negative return of -0.6% in the first half of last year.
The FTSE 250 real estate investment trust said that return consisted of both net asset value growth, as well as dividends paid during the six months ended 30 September.

Since its initial public offering, LXi said it had delivered an annualised total net asset value return of 10.7% per annum, well ahead of its medium-term target of 8%.

The board said the dividend for the half-year totalled 3p per share, up from 2.65p per share year-on-year, representing 13.2% growth.

Adjusted earnings per share came in at 3.5p, up from 3.3p a year earlier, representing growth of 6.1% over the first half of 2020, and a rate of 1.1x the dividend per share.

LXi REIT said its portfolio was independently valued at £1.22bn, reflecting a six-month like-for-like uplift of 4.9% across its assets.

The growth was said to have been "broadly spread" across sub-sectors, with foodstores and essentials seeing like-for-like growth of 5.3%, industrial assets of 7.3%, and hotels of 2.0%.

Healthcare saw like-for-like growth of 2.7%, car parks of 3.0%, drive through coffee of 2.3%, pubs of 7.3%, and garden centres of 4.2%.

EPRA net tangible assets per share, excluding dividends, totalled 134p, rising from 125.7p and reflecting a half-year increase of 6.6%, primarily driven by the like-for-like portfolio growth.

LXi said its loan-to-value ratio stood at 25% at period end, compared to 23% as at 30 September 2020, with "significant headroom" to its medium-term borrowing policy cap of 35%, and banking covenant of 50%.

The board noted that the firm raised gross equity proceeds of £104m via its placing programme in July.

"This has been a busy six-months, delivering substantial portfolio growth, an increased capital base and a strong total return performance," said chairman Stephen Hubbard.

"The group's income and capital growth have produced a half-year total net asset value return of 9.0%, and we are on track to meet our 6p per share dividend target for the full year.

"We were delighted that new and existing shareholders supported our growth plans by subscribing for a further £104m of equity during the half-year, increasing our market capitalisation to over £1bn within five years of our initial public offering."

Hubbard said deployment of the net proceeds from the two capital raises under the firm's placing programme had provided value to shareholders through accretive acquisitions, diversified across a range of "defensive and structurally-supported" sub-sectors, and let to "high-quality" tenant covenants.

"I am very pleased that the investment advisor continues to access deals at yields significantly wider than the investment market through its broad network of corporates and developers.

"As inflation continues to rise in the UK, the group's portfolio is well placed to deliver defensive inflation protection for our shareholders and indeed to benefit from this trend, with 96% of the portfolio either index-linked or containing fixed uplifts."

At 1036 GMT, shares in LXi REIT were up 2.58% at 151.2p.