The recently launched LXi real estate investment trust (Reit) has used recent initial public offering (IPO) fundraising to expand its portfolio with five acquisitions.
The investment trust focuses on properties with ultra-long leases in an effort to provide investors with long term returns similar to that of bonds.
It has purchased the head office and manufacturing facility for GE Oil and Gas group in Cramlington, Northumberland with a total funding commitment of £11.1m, reflecting a net initial yield of 5.75 per cent.
The lease to GE’s subsidiary PII Ltd will run for 20 years and “upward only” rent reviews in line with the retail price index (RPI) will occur every five years.
Simon Lee, partner of LXi REIT Advisors Limited, said the 20-year lease term to an established company will provide the trust will “secure, long term and RPI inflation-linked” income with an attractive initial yield.
Pre-let investments in a Travelodge hotel, a Starbucks coffee shop and a Greggs bakery at Melksham, near Bath, have also been secured for £6.2m and a net initial yield of 5.91 per cent.
John White, partner of LXi REIT Advisors Limited, said the trust is at an “advanced stage” on a number of forward funded pre-let and standing assets, which are planned to be leased to institutional grade tenants.
The trust has also acquired the Q-Park car park at Rockingham Street, Sheffield for £19.1m and a net initial yield of 5.2 per cent.
The property offers a lease term of at least 28 years, an RPI rent review and stable business and is expected to generate secure, very long term and index-linked income”, according to Mr White.
LXi trust floated on the London Stock exchange at the end of January with the intention to raise £200m.