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LXi REIT PLC on Tuesday announced the sale of a 65-year income strip, comprising 30% of the annual rental income gained from the company's Thorpe Park and Alton Towers assets for £257 million, at a net initial yield of 3.0%.
The real estate investment trust will sell the freehold in the properties to the buyer, and will be grated 999-year leases back, following which LXi will pay the buyer an annual aggregate rent of £8.2 million.
LXi REIT holds the option to acquire the freehold back for a nominal price of £1 in year 65, as well as 70% of the rental income for the assets.
‘The company retains, therefore, both 70% of the rental income for the properties, along with the freehold and all reversionary value after 65 years. The properties are let to Merlin with 55 years unexpired until first break, with a 35-year extension option on expiry,’ it said.
Proceeds from the sale will go towards repaying £232 million in debt secured against Thorpe Park, Alton Towers and Warwick Castle.
‘We are delighted to have signed this innovative transaction, which materially reduces the company's debt levels whilst generating significant earnings accretion,’ said Fund Manager Simon Lee.
Shares in LXi REIT were up 2.1% at 151.05 pence on Tuesday in London.
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