Further to its acquisitions announcement of 28 March 2021 [we reported], LXi REIT has acquired an Aldi foodstore and a Dobbies garden centre for a total cost of £24 million.
The acquisitions, which were acquired off-market, benefit from an accretive average net initial yield of 5.45% (net of acquisition costs), a long average unexpired lease term to first break of 29 years, are let to strong tenant covenants on sustainable, low rents, and 100% of the income is index-linked to RPI inflation through contractual rental uplifts.
Further acquisitions are expected to be announced shortly.
Dobbies garden centre, Gloucester
The company has acquired an eight acre, 122,000 sq ft garden centre in Gloucester. The property is let to Dobbies, the UK’s largest garden centre operator and an existing tenant of the company, with 35 years unexpired to first break and benefits from RPI rental uplifts, reviewed on an annual basis, with a collar of 1% pa and a cap of 4% pa.
The garden centre, which benefits from 236 car parking spaces, trades strongly and is well located adjacent to Junction 12 of the M5, just to the south of Gloucester.
The property also sells 3,000 items of Sainsbury’s grocery and household products, under the terms of a joint venture between Dobbies and Sainsbury’s, which has been rolled out recently across the Dobbies estate and is proving to be extremely successful.
One of the key benefits of garden centres is their flexible planning consent, which permits the sale of a wide range of products, including food. Garden centres have been classified as essential retail and thus have continued to trade during the UK’s last two national lockdowns.
Aldi forward purchase, Glasgow
The company has exchanged contracts on the forward purchase of a new 17,000 sq ft foodstore in Glasgow. The property is pre-let to Aldi on a new lease with 16 years unexpired until first break.
The rent will increase in line with RPI inflation on a five yearly basis, with a collar of 1% pa and a cap of 2.5% pa and the current rent equates to a low £14.80 per sq ft.
The property, which benefits from 120 car parking spaces, is well located in close proximity to Glasgow city centre, which is to the east, and lies immediately adjacent to Ibrox football stadium, and is surrounded by densely populated residential areas.