Wealth & Finance July 2017

7 July 2017 £6.1 Million Forward Funded Pre-Let Investment in a New Hotel, Coffee Shop and Restaurant Development The Board of LXi REIT plc on 24th July announced that it has exchanged contracts to provide forward funding for the development of a new Travelodge hotel, drive-through Costa coffee shop and drive- through KFC restaurant in Camborne, Cornwall. The development represents an investment of £6.1 million, reflecting a net initial yield of 6.15% on the asset acquisition (net of acquisition costs to the company). Upon practical completion, which is targeted for May 2018, the new de- velopment will comprise of: • A 63-bedroom hotel pre-let to Travelodge Hotels Limited, the prin- cipal trading company of the Travelodge group, the UK’s largest in- dependent hotel chain with more than 520 hotels and over 38,000 guest bedrooms. This will account for 71% of the total rental income of the property on a new 25-year lease (with no tenant break right), subject to five yearly upward only, CPI-linked rent reviews (collared and capped at 0% p.a. and 4% p.a. compound); • An 1,800-sq. ft. drive-through coffee shop pre-let to Costa Limited, a subsidiary of Whitbread PLC, a FTSE 100 company with a market capitalisation of £7.1 billion. Costa is a leading operator of coffee shops, with 2,861 outlets across 30 countries. This will account for 12% of the total rental income of the property on a new 10-year lease (with no tenant break right), subject to five yearly upward only open market rent reviews (capped at 3% pa compound); and • A 2,950-sq. ft. drive-through restaurant pre-let to a leading KFC fran- chisee. This will account for 17% of the total income of the property on a new 20-year lease (with a break right at year 10), with upward only open market rent reviews. The property is well located directly fronting the A3047 Tolvaddon Road, 100 metres from the main A30 arterial highway. Camborne and nearby Poole and Redruth combine to form Cornwall’s largest conurbation and Camborne plays an important role to the wider catchment of the penin- sula in providing housing, retailing and leisure facilities. The three tenant pre-lets have exchanged, full planning permission is in place and the company is acquiring the land and forward funding on a fixed-price basis. The developer will pay the company a licence fee during the construction period. The company is not developing the site or assuming development risk. The acquisition is being funded from equity resources, with senior debt finance to be introduced in the near term. John White, partner of LXi REIT Advisors Limited, commented: “We are pleased to provide the forward funding for this attractive long-let hotel and leisure development asset with a compelling initial yield, pre-let to tenants with strong covenants, and which adds further geographic diver- sification to the current portfolio.”