LXi Reit has bought a life science campus in York and Scottish Television’s Glasgow studios for a total of £80m.
The 382,000 sq ft campus stretches over 82 acres and is fully let to Capita on a long lease, with 25 years unexpired until first break. The current rent for the campus, which is 75% paid by government agencies, is very low at £7.50 per sq ft and is highly reversionary relative to the ERV of around £13.50 per sq ft.
There is also room to expand. LXi said this may provide opportunities “to further enhance the value of the asset through the prelet forward funding of additional buildings”.
LXi has also bought STV’s media studios and HQ on Pacific Quay, Glasgow. The Media Facility, which was purpose-built for STV, comprises 63,000 sq ft over four floors, along with 150 car parking spaces.
STV will continue to occupy the site, which contains all of STV’s live news studios, on a new, unbroken 20-year lease. The current rent reflects a low £16.25 per sq ft, which is highly reversionary. Grade-A office rent in Glasgow is currently in the order of £35 per sq ft.
The REIT said it had also bought a recycling facility in Aberdeen, let to Biffa on a long lease with 14 years to run until the first break. The deals reflect a net initial yield of 5.25%, against a current portfolio value of 4.7%.
LXi said it had also sold its Lidl supermarket in Chard, Somerset for £7.8m, reflecting a low exit yield of 3.8%.
The sale price reflects a premium of 38% on the price paid by the company in 2017 and generates an IRR of 26% pa. LXi bought the store as a forward funding, at a 5.5% net initial yield, in 2017.
LXi REIT Advisors partner Simon Lee said: “These transactions demonstrate the company’s continuing ability to make accretive and secure long-income investments across a wide range of structurally supported sub-sectors, including its first investment in the life science arena, as well as highly profitable disposals.”
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