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REIT Snaps up Dundee Student Accommodation

Posted by Richard Ward in

Image courtesy of Flickr, Creative Commons

LXi REIT Plc has announced the acquisition of a long-let student accommodation scheme in Dundee for £20.25 million, reflecting a net initial yield of 6.3%.

The property is fully let to Mears Group Plc. The lease covers a term of over 21.5 years, with no tenant break right, which expires in September 2039. The rent is reviewed annually in line with uncapped Consumer Price Index inflation but comes with a collar of 1% per annum.

The block of student accommodation consists of 413 beds and comprises 379 rooms within cluster flats of two to six beds, along with nine one-bed flats and 25 self-contained studios.

The property is located in the centre of Dundee and underwent a significant refurbishment in 2017.

The acquisition is being financed by the company's new 11.5-year loan facility secured from Scottish Widows in December 2017, at a fixed rate of 2.85% per annum.

LXi REIT Plc has deployed £263 million of equity and debt since its IPO in February 2017, with an average net initial yield of over 6%. The company has a diversified portfolio, with 97% of the income inflation-linked or with fixed-uplifts.

Commenting on the acquisition, Simon Lee, Partner of LXi REIT Advisors Limited, said: "We are pleased to have acquired the Dundee student scheme, which further diversifies the Company's sector exposure. The acquisition provides a long-term, index-linked income stream at an attractive net initial yield, underpinned by an excellent location in a leading university city and a strong underlying trading performance."