LXi REIT said on Thursday that it has exchanged contracts to buy 18 grocery store assets from Sainsbury’s on a sale and leaseback basis for £500m.
The commercial property investor said the purchase price equates to a net initial acquisition yield of 5%, which is accretive to the company’s portfolio yield of 4.7%.
It said the target portfolio, located mainly in Southern England, benefits from defensive characteristics including strong trading performance, low and sustainable rents, new 15-year lease terms, five yearly upward only CPI inflation-linked rent reviews and attractive ‘green’ lease provisions.
The portfolio also has a robust tenant covenant being 100% let to Sainsbury’s Supermarkets.
LXi said completion of the deal is conditional upon it raising the necessary equity funding, for which it is currently in discussions with investors. The balance of the purchase price will be funded via a debt facility, which is expected to be drawn at an accretive and attractive, low all-in maximum rate of 1.5% per annum and otherwise on terms in-line with the company’s borrowing policy.
