LXi REIT, an inflation-protected very long income REIT, said Wednesday it had agreed to provide forward funding of £23.4m to pre-let development of a portfolio of 13 separate Starbucks and Costa drive-thru format coffee shops.
The transaction reflected a 5.7% net initial yield, and the company said it would not be developing the sites or assuming development risk.
The company said 12 of the properties had been pre-let to Starbucks and one had been pre-let to Costa, each on unbroken leases of 15 years from completion of the building works, with five yearly rent reviews index-linked to RPI inflation - collared at 1% per annum and capped at 4% per annum compound.
The building works are due to complete in Q3 2019. The Company will receive an income from the developer during the construction period.
'This transaction provides our investors with rare access to the strong Starbucks and Costa covenants in scale and the individually granular lot sizes, forward funding structure and off-market nature of the purchase have delivered a highly attractive yield, coupled with RPI-linked rental uplifts and capital growth potential,' said Simon Lee, Partner of LXI REIT Advisors.
At 10:01am: (LON:LXI) LXI Reit Plc share price was 0p at 120.5p