Deals



LXi REIT plc has acquired the SIG manufacturing facility at Welton, Carlisle


Posted: 2nd June 2017 08:33

The Board of LXi REIT plc (ticker: LXI) is pleased to announce that the Company has acquired the SIG manufacturing facility at Welton, Carlisle (the "Property") in a sale and leaseback transaction. The purchase price for the Property is £9.3 million, reflecting a net initial yield of 7.0% (net of acquisition costs to the Company).

The Property has been acquired with a new 25-year lease in place and is fully let to SIG (Trading) Limited, the principal trading company of the SIG plc group ("SIG"), a leading, multinational manufacturer and distributor of specialist building and energy management products in the UK and Europe. SIG is a FTSE 250 listed company with a market capitalisation of over £900 million.

The new 25-year lease (with no tenant break right) expires in May 2042 and is subject to five yearly upward only rent reviews index-linked to the Retail Price Index (collared and capped at 2% p.a. and 4% p.a. compound).

The Property comprises a substantial manufacturing facility of 248,333 sq ft, on a 15 acre freehold site (providing a low site coverage of 38%), which is used for the manufacture of profiled metal roofing and other cladding elements.  The Property includes a new high specification 89,000 sq ft cladding production facility, constructed in March 2016, along with a range of other factory units as well as storage and office facilities that have been built over the past 20 years. The Property has benefited from significant capital investment by the tenant.

The Property is located in Welton, to the south of Carlisle, with close proximity to the M6. Carlisle is the main administrative centre of Cumbria and benefits from excellent road and rail connectivity.

The acquisition is being funded from equity resources, with senior debt finance expected to be introduced in the near term.

The Company now qualifies formally for REIT status, having acquired a sufficient number of built assets, in addition to forward fundings and forward commitments.

Simon Lee, Partner of LXi REIT Advisors Limited, commented:

"We are pleased to have acquired this manufacturing facility, fully let to SIG, which provides the Company with an attractive net initial yield of 7.0% and a secure and unbroken 25-year RPI-linked income stream.  The starting rent has been set at a low level, meaning the capital price equates to only £37 per sq ft.

The Company has now acquired nine assets, deploying just under 75% of its net equity, at an attractive blended net initial yield of 5.85% and with a long WAULT to first break of 23 years, since Admission on 27 February 2017. We are also in solicitors' hands on a number of additional forward funding and built transactions which will fully absorb the balance of the Company's net equity in short order."


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