LXI REIT to buy Sheffield car park and fund BathTravelodge development

LXI Real Estate Investment Trust is to buy a Sheffield car park and is to provide funding for a development of a new Travelodge hotel in Bath.

The London-listed company will buy the car park in Rockingham Street for £19.1m, which reflects a blended net yield of 5.2% and will be funded from equity resources with senior debt finance in the near term, with completion of the deal expected on 12 April.

The six story car park is 96% let to Q-Park with a 28-year lease guarantee from its parent, Q-Park NV, a European car park operator, which is subject to five yearly upward rent reviews linked to the retail price index with the next rent review due in August 2020.

The remaining 4% is let to a leisure operator for use as a bar and restaurant with an unexpired lease term of over 19 years with a rent review due in August 2021.

The company will also provide £6.2m of forward funding for the development of a new Travelodge hotel, a drive-through Starbucks coffee shop and a Greggs retail unit in Melksham, near Bath, representing a net yield of 5.91%.

Planning consent for the developments, which are to be completed by February 2018, has already been granted and pre-let contracts by the tenants have been exchanged.

LXI is buying the land and forward funding on a fixed-price basis and the developer will pay the company a licence fee during the 10.5 month construction period.

The company is also in the advanced stage on a number of forward funded pre-let and standing assets, leased to institutional grade tenants, which meet its investment criteria, John White, a partner of LXI REIT Advisors, said.