The Board of LXI REIT plc (LON:LXI), the specialist inflation-protected very long income REIT, provided today the following update on its final dividend and trading. This update is ahead of the Company’s annual results for the year ended 31 March 2020, which are expected to be announced as scheduled in late May 2020, subject to any further guidance from the FCA and FRC being published before then.
Covid-19 (Coronavirus) continues to bring uncertainty for most areas of economic and social life, but the Company remains relatively well placed given its robust balance sheet, low leverage and defensive and diversified portfolio of long let, index-linked real estate assets let or pre-let to a wide range of strong tenant covenants.
Confirmation of the expected approval and payment of final dividend
The Board confirms that it expects to approve the payment of the Company’s final quarterly dividend in respect of the year ended 31 March 2020, at the rate of 1.4375 pence per share. The final dividend is scheduled to be announced in May 2020, along with the Company’s annual results, and paid in June 2020. This will meet the Company’s dividend per share target of 5.75 pence for the year.
Collection of quarterly rent
As at the date of this announcement, 67% of the Company’s rent due in respect of the quarter ending 30 June 2020 has been received.
Unsurprisingly, some of the Company’s customers are experiencing unprecedented short-term disruption to their business models. The Group is actively assisting those that are being materially impacted by providing proportionate assistance.
LXI REIT plc is in advanced discussions with tenants which represent a further 30% of the rent roll to agree payment plans, which include conversions to monthly or in arrears payments or deferral and stage repayments over a defined period. Where any liability is deferred, it still remains due and the Company expects it to be repaid.
Low, long dated and low-cost debt facilities, with significant covenant headroom
The Company’s loan-to-value ratio stands at 20%, against a covenant of 50% and its interest cover is c. 600% versus a debt covenant of 300%.
The Company’s debt has an average maturity of 12 years and is fully fixed at an average all-in rate of 2.94%.
Pre-let forward fundings
The Company is not exposed to any material development risk through its forward funding projects. On all developments, full planning consent is in place, the tenant pre-let has been signed, the price is fully fixed, payments are made in arrears and the developer’s profit is retained by the Company until completion.
The Company receives a developer licence fee for the full duration of the construction works, which is fully cash-backed by means of a significantly over-collateralised retention in the Company’s bank account.
The Company’s remaining forward funding commitments are fully covered by the Group’s undrawn revolving credit facility.
For the above reasons, although certain of the Company’s pre-let forward funding projects may well take longer to deliver than originally anticipated given COVID-19’s impact on working practices, the Company does not anticipate a financial impact from such potential delays.
LXI REIT is continuing to monitor closely the development of COVID-19 and will continue to keep shareholders and wider stakeholders updated and informed as the situation evolves.
The Group enjoys excellent relationships with its stakeholders which, combined with its experience, financing structure and resources, means that the Group remains well placed to deal with the current disruption and emerge with a strong portfolio and deep occupier relationships.
