Portfolio update

26 March 2018

LXB RETAIL PROPERTIES PLC

("LXB")

Portfolio update following Court approval of scheme of arrangement

LXB, the Jersey resident closed-ended real estate investment company focused on edge of town and out of town retail assets today announces the following portfolio update following the approval of the Royal Court of Jersey to the proposed reorganisation of the LXB Group. The Group is committed to delivering on the shareholders mandate to realise any remaining value in the form of cash to its shareholders as quickly as possible subject to the contracts and obligations that it retains as it completes its last few developments. 

At Rushden Lakes discussions are ongoing with Highways England to resolve any outstanding liabilities in relation to the highways contract although at the current time there is no further material progress to report. 

Progress continues to be made on final lettings albeit in a very challenging occupational market. In the Phase 2 leisure element, contracts have been exchanged with Out of Office Coffee to take a 1,100 sq ft unit and terms are agreed and solicitors instructed on a unit of 1,950 sq ft. In addition, terms are agreed on a further restaurant unit of 3,500 sq ft. This leaves two final units to let comprising a combined floorspace of 6,000 sq ft. On Phase 3, the retail terrace, terms are agreed for the final 6,000 sq ft unit. The build contracts for both phases remain on target with Practical Completion of Phase 2 due in January 2019 and Practical Completion of Phase 3 in June 2018. 

On Phase 4, The Garden Square, a resolution to grant planning consent was approved at the planning committee of East Northamptonshire District Council on 14 March 2018. The scheme will go back to the April planning committee to finalise the wording of several planning conditions which were deferred by the committee in March. The application will then need to be referred to the Department for Communities and Local Government to confirm that they do not wish to call the scheme in for review. The Garden Square comprises 13 units totalling 17,500 sq ft of ground floor space. At present three units are in solicitors hands with terms agreed on a further two units. 

Discussions are ongoing with The Crown Estate in respect of the funding of the Garden Square phase, as it is unlikely that it can be delivered prior to 31 March 2019 in line with the current Development Agreement, and in relation to the release of the Phase 1 performance bond held in favour of The Crown Estate. These discussions are expected to be concluded shortly and should lead to the release of the bond and a further return of cash to shareholders. 

At Stafford the build for the leisure element is due to complete in August. No further lettings have been agreed in what remains a difficult occupational market.

At Biggleswade, terms are agreed and solicitors are instructed with two retailers in respect of the sub-division of the final unit. Planning approval is expected in April and it is hoped the leases will complete by the Autumn, following the sub-division works.

Terms are agreed and solicitors are instructed on the sale of the remaining interests at Sutton and the Isle of Sheppey. These sales are expected to complete in April / May 2018. 

The Board still believes there is a reasonable prospect that the previous NAV guidance of between 30p and 35p in cash over the period to 31 March 2019 can be met; however with the continuing difficulties in the occupier markets, in particular the Group's exposure to the occupational leisure market, the expectation is that it will be at the lower end of this range.

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