LXi REIT has offloaded a 248,300 sq ft manufacturing facility occupied by SIG Group to a pension fund, just over a year after it bought the same property for £9.3m.
The REIT completed the acquisition of the property in Welton, just South of Carlisle, in June last year for £9.3m, reflecting a net initial yield of 7%. The scheme is let to SIG until May 2042, is on a 15-acre freehold site, and also features a 89,000 sq ft cladding production facility, built in March 2016.
LXi has now sold the site to a UK pension fund for £12.2m, reflecting an exit yield of 5.38%, and a 31% uplift on its acquisition cost, along with a geared IRR of 39% per year.
At the time of its acquisition, LXi said the starting rent for the site was at a low level, meaning the capital price paid equated to around £37/sq ft.
The REIT has used the proceeds of the disposal to buy two new-build assets in the North East for a combined purchase price of £11.6m.
Simon Lee, partner of LXi REIT Advisors, said: “We are pleased to have completed the disposal of the SIG asset at a significant premium to acquisition cost and book value and to have immediately recycled the proceeds into two modern industrial facilities that benefit from a weighted average unexpired lease term of over 23 years, enhanced tenant covenants and attractive guaranteed rental uplifts.”
Other recent acquisitions for LXi include the freehold interest in Stobart’s industrial and office headquarters complex in Widnes; the REIT completed a £25.5m sale and leaseback deal on the site in June this year.