LXi REIT has added more than £500m to the value of its portfolio in the past year as it moves closer to a union with Secure Income REIT.
The long-income focused REIT increased its portfolio value by 65% from £938m to £1.54bn over the period, thanks to average valuation increases of 10.5% and the addition of 65 properties at a cost of £558m. The REIT’s net asset value rose by 66% to £1.3bn as the LTV was kept steady at 22%.
Cyrus Ardalan, who joined the board as chair in March, said: “This has been another transformational year for the group, delivering increased scale and diversification, with £354m of new equity raised and fully invested, as well as a strong financial performance with an 18.2% total NAV return.”
He added that a merger with Secure Income, terms of which were announced on 11 May, was still the best option for the REIT.
“The proposed merger with Secure Income REIT brings together two complementary long, inflation-linked portfolios while maintaining the conservative and highly attractive investment case that our shareholders have benefitted from since IPO as well as the defensive scale that will support the group in navigating the existing uncertainty,” Ardalan said. A vote is expected to be held on 22 June.
LXi’s portfolio now comprises 193 properties let to 70 tenants and is spread across 11 subsectors, the REIT having entered education and life sciences during the year. The portfolio has retained its long-income characteristic, with an average of 21 years to the first break option.
Rental income from the portfolio rose by 37% over the year, reaching £58.5m, while operating profit rose by a third to £49.2m. Earnings per share soared by 200% to 22.8p.
Ardalan said he was conscious of the impact of “geopolitical uncertainty, as well as the cost of living crisis and inflation”, but added: “I am comforted by the defensive and robust platform that the group enjoys through its diversified long-let assets, high-quality tenant operators and inflation-linked rents.”
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