LondonMetric Property has completed its merger with LXi REIT, creating a company with a portfolio of assets worth £6.2bn.
Following completion of the deal, LXi REIT’s Nick Leslau has been appointed as a non-executive director of LondonMetric.
LondonMetric has also exchanged on the off-market acquisition of a 213,000 sq ft logistics development on a 20-acre site at Radway Green, Crewe, for £13m. Marshall CDP, which developed the five unit scheme, will take a three-year leaseback of the site and pay a rent of £1.15m per annum, reflecting a net initial yield of circa 11%.
Upon letting the development, LondonMetric will pay CDP an overage payment based on a fixed percentage of the difference between the initial purchase price and open market value. Based on a market rent of £1.8m per annum, LondonMetric expects to achieve a yield on cost of circa 8%.
The REIT has also sold two non-core assets for £5.9m which reflects a 5% premium to the valuation as at 31 December 2023. In Burnley, it has sold a 37,000 sq ft B&Q unit let for a further seven years to the retailer and in Halesowen it has sold a 20,000 sq ft vacant office.
Andrew Jones (pictured), chief executive of LondonMetric, said: “The merger is a transformational deal that creates the UK’s leading triple net lease REIT with full occupancy and exceptional income longevity and certainty of income growth. The new larger business will deliver better liquidity, material economies of scale, substantial cost savings with improved terms in both debt and equity markets. Our enlarged balance sheet will also allow better access to new opportunities of scale, which will drive accelerated earnings and dividend progression.
“I would like to take this opportunity to welcome both our new shareholders as well as our new colleagues from LXi including Nick Leslau to the board. Our team is strongly aligned to shareholders and has deep real estate experience with a strong track record for capital allocation, asset recycling and active management.
“As evidenced by today’s update, we will continue to reposition parts of the portfolio with an emphasis on growing our exposure to logistics which remains our strongest conviction call and is delivering high organic rental growth. We are also seeing interesting investment opportunities arising from debt refinancings and fund redemptions and the acquisition announced today is an excellent example of an innovative transaction that leverages our strong relationship with the developer and offers an attractive return profile.”
