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LXI REIT Acquires Dundee Student Accommodation

Posted by Richard Ward

Image courtesy of Flickr, Creative Commons

LXI REIT Plc has purchased a student accommodation scheme in Dundee for £20.3 million.

The company said the property is let to Mears Group Plc and has a lease with an unexpired term of over 21 years, expiring in September 2039. Rent at the property is reviewed annually and adjusted in line with the consumer prices index plus a 1% premium.

The building has a total of 413 beds split across cluster flats of between two and six bedrooms, one bed-flats, and self-contained studios.

Located in the centre of Dundee, both the University of Dundee and Abertay University are within walking distance. The property also underwent a significant refurbishment programme, which was completed in September 2017.

According to LXI, the building has a "high" level of occupancy and Dundee has a "strong" underlying supply and demand imbalance for student accommodation.

LXI will fund the acquisition by using a £40 million loan facility with Scottish Widows Ltd, which comes with an interest rate of 2.85% and is due in July 2029.

Commenting on the purchase, partner at LXI REIT Investment Manager, Simon Lee 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."