LXi REIT EPS falls 6.7%, portfolio value grows 64.6% as group eyes merger proposal

LXi REIT shares were down 0.2% to 144.9p in early morning trading on Tuesday following a reported 6.7% fall in EPS to 7p in FY 2022 compared to 7.5p in FY 2021.

LXi REIT confirmed a 33.3% increase in operating profit before fair value changes to £49.2 million from £36.9 million, along with a climb in rental income of 36.7% to £58.5 million compared to £42.8 million in the previous year.

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The company announced a total NAV return growth of 12.6% to 18.2% against 5.6%, alongside an EPRA NTA per share climb of 13.4% to 142.6p from 125.7p the year before as a result of like-for-like portfolio value growth and the value acquired at purchase on new acquisitions.

LXi REIT mentioned a total shareholder return uptick of 1.6% to 23.3% compared to 21.7% and a portfolio value rise of 64.6% to £1.5 billion from £938.4 million in the previous year on the back of a 10.5% like-for-like rise, broadly spread across the trust’s sub-sectors including a 10.2% uptick in food stores and essentials, a 10.4% increase in pubs and a 9.2% climb in drive-thru coffee.

The firm noted a loan to value dip of 1% to 22% against 23%, and a total expense ratio increase of 10 basis points to 1% compared to 0.9% year-on-year.

“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. I thank our shareholders for their continued support in the year,” said LXi REIT chairman Cyrus Ardalan.

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“Geopolitical uncertainty, as well as the cost of living crisis and inflation, have meant that global markets remain volatile and interest rates continue to rise but 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.”

The REIT announced several acquisitions and disposals, including the completion on an Asda food store in Birmingham with a 22-year unexpired lease term and five yearly fixed uplifts of 3% per year compounded, alongside exchanged contracts to forward fund an M&S grocery store in Scotland with a total funding commitment of £5.7 million.

The company confirmed it was eyeing a proposed merger with Secure Income REIT, which is conditional on shareholder approval, and is scheduled for a vote at the shareholder general meeting on 22 June 2022.

“My fellow Directors and I believe that the proposed merger with Secure Income REIT plc brings together two complementary long, inflation-linked portfolios whilst 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,” said Ardalan.

LXi REIT announced a dividend per share growth of 8.1% to 6p compared to 5.5p the last year for FY 2022.

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