LXI REIT acquires 16-acre long-let asset in Middlesbrough

Commercial property investor LXI REIT has acquired a 16-acre long-let property in Middlesbrough valued at £58.9m from Knight Frank.

LXI REIT said on Thursday that it would satisfy the acquisition of the asset, currently let to Sainsbury's, via the issue of 35.71m new ordinary shares at an issue price of 145.0p each, a 9.4% premium to the company's ex-dividend EPRA NTA on 30 September, and a further £7.0m in cash.

The FTSE 250-listed firm stated the total consideration represented a net initial yield of 4.9% and was expected to rise to 5.7% at the next inflation-linked rent review in 2025.

LXI REIT noted that the property, which was made up of 127,000 square feet of built area, along with 850 car parking spaces and a petrol filling station, provided "good opportunities" for asset management and ESG initiatives and added that rent would increase every five years, in line with RPI inflation, collared at 1% per annum and capped at 4% every year.

Fund manager Simon Lee said: "We are pleased to acquire this well-let asset underpinned by a long, inflation-linked lease to a FTSE 100 company, with good asset management opportunities to enhance income and capital returns.

"The consideration predominantly takes the form of the issue of new shares in the company at a material premium to NAV, which further enhances the accretive nature of the transaction."