LXi beats dividend targets in maiden results

LXi REIT postes its maiden annual results on Monday, reporting a total return of 11.91%, comprising the increase in net asset value since its initial public offering and dividends paid in the period.

The London-listed firm said its EPRA net asset value per share increased 9.87% in the period from incorporation to 31 March 2018, to 107.67p from 98.00p at IPO.

Its portfolio was independently valued at £278.92m across 84 assets, against portfolio costs of £255.47m, representing a 9.18% increase.

The increased annual dividend per share target for the period was 4.0p, the board said, representing a 33.33% increase on the 3.0p target set at IPO.

That would be met by payment of the final dividend proposed by the board of 2.0p per share, and would be fully covered by the group's EPRA and adjusted earnings per share.

The annual dividend target for the year ending 31 March 2019 was also increased 10% to 5.50p per share, from the 5.0p set at IPO.

LXi reported a contracted annual rent roll of £16.98m, including pre-let forward funded properties.

Of that rent roll, 96% was index-linked or contained fixed rental uplifts.

Adjusted earnings per share stood at 5.12p for the period, with EPRA earnings per share of 4.20p.

The company claimed a low total expense ratio of 1.14%, being operating expenses and management fees as a percentage of net asset value.

Aggregate average all-in debt cost across the portfolio stood at 2.90% per annum, fully fixed for the 11.3 year remaining loan term.

It also pointed to its low loan-to-value ratio of 30% - 500 basis points below its maximum ratio at IPO of 35%.

LXi raised total gross proceeds of £198.35m during the period - £138.15m at IPO in February 2017 and £60.20m in a further placement of new ordinary shares in October.

“The group's performance in its maiden annual period has been strong, meeting - and in many areas exceeding - our targets at the time of the company's IPO,” said chairman Stephen Hubbard.

“The board believes that, with a backdrop of continuing economic and geopolitical uncertainty, the group's portfolio is resilient and increasingly attractive to investors seeking stable income and capital growth.

“The company offers investors a secure, diversified and growing index-linked income stream as well as attractive capital appreciation from our long-let, high quality and robust portfolio across defensive sectors with strong tenant covenants.”

Hubbard explained that, despite a rising interest rate environment, there remained - and the board expected there to continue to be - a “very significant and positive” spread between the company's index-linked portfolio yield and bond rates.

“Furthermore, the board remains confident about delivering further value to our shareholders through the investment advisor's strategies of acquiring selectively across a wide range of robust sectors on an 'off-market' basis and forward funding pre-let developments in smaller lot sizes.”