LXi REIT declares Q1 dividend after NAV return rises

LXi REIT said it expected to declare a first quarter dividend as the commercial property investor reported an increased annual return and said it was in talks to recover unpaid rent.

The FTSE 250 company's net asset value (NAV) return for the year to the end of March rose to 13.4% from 12.1% a year earlier. Operating profit more than doubled to £78.4m from £37.3m.

LXi declared a final dividend of 1.4375p a share, taking its total annual payout to 5.75p a share, up from 5.5p a year earlier. The company said the board expected to approve a dividend for the first quarter of the current year of 1.3p a share, covered by rents.

The company's shares rose 4.1% to 98.88p, The shares have fallen by about 30% in 2020.

LXi said its portfolio was exposed to sectors that are largely unaffected by the Covid-19 crisis and others that are suffering "unprecedented short-term disruption". The company's properties include retail, factories, offices and student housing. On payment date in March £3.3m of rent went unpaid, representing 6.8% of its annual rent.

The company said its investment adviser was negotiating with tenants that had not paid their rent. The adviser has agreed terms with one tenant on £1.7m of rent outstanding, including less than £0.1m of rent concession. Another £1.6m is under detailed discussion and the adviser expects most of the money to be paid in the next 12 months.

Stephen Hubbard, LXi REIT's chairman, said: "The results for the year ended 31 March 2020 were largely unaffected by the crisis and the group continued to perform well during the year. The investment adviser's sourcing of suitable assets has allowed the group to continue to deliver good returns to shareholders.

"The board considers [the first-quarter dividend] to be an appropriate level of dividend in view of the company's rent collection and expects the dividend to be fully covered by rents received in respect of the quarter. We will continue to monitor the improving visibility on future rent collection as the UK moves out of lockdown and will keep dividend guidance under careful review on a quarterly basis."

Hubbard said the reopening of garden centres and the government's intention to reopen some pubs and hotels from early July would support its tenants in those sectors.