LXi REIT, a London-based real estate investment trust, has completed an off-market sale-and-leaseback acquisition of 23 nursery schools in England for £34 million.
The nurseries have been acquired from and leased back to KidsFoundation, a large provider of education and care services for children, with more than 900 facilities across the UK and northern Europe.
LXi REIT stated: “The nurseries are well located across England, with strong and affluent catchment populations and the rent has been set at a sustainable level to produce a high rent cover of 2.75X on an individual asset basis. This ensures the rent remains affordable for the tenant whilst the investment is also underpinned by vacant possession value.
“Each property benefits from a new, unbroken 30-year lease to the top entity within the KidsFoundation group. The rent increases on an annual basis in line with RPI inflation until 2030, from which date the reviews convert to CPIH inflation plus 0.83 per cent per annum. The reviews contain a collar of 1% per annum and a cap of 4% per annum.”
John White, partner at LXi REIT Advisors said: “We are delighted to have made this first, substantial sale and leaseback acquisition for the company in the robust nursery school sector. The portfolio provides LXi with highly secure, inflation-linked and diversified 30-year cashflows, supported by sustainable rents and strong residual values.”
Date published: 2 September 2021