LXi REIT has exchanged contracts to forward fund a portfolio of nine Costa drive-thrus and an industrial asset in the UK for a total cost of £36 mln (€42 mln).
The acquisitions fully deploy the balance of the company’s £125 mln equity capital raise carried out in March, the company said in a statement.
The portfolio boasts a long average unexpired lease term to first break of 22 years generating an accretive average net initial yield of 5.25% (net of acquisition costs). The assets are to be developed for and pre-let to Costa Limited on new, long term leases.
Costa Limited, which was acquired by Coca-Cola in 2019 from Whitbread in a $4.9 bn transaction, is the largest coffee shop operator in the UK with over 2,681 units.
LXi REIT said that it expects to announce new acquisitions shortly.
‘Whilst we are not able to share some of the asset specific details due to confidentiality, all of the properties have been acquired off low base rents and at accretive average entry yields and provide secure, long-dated, index-linked income and potential for capital growth, underpinned by strong tenant covenants,’ said John White, Partner, LXI REIT Advisors.