LXi earnings rise as portfolio value narrows slightly

(Sharecast News) - LXi REIT reported a strong set of interim results on Thursday, with EPRA earnings per share increasing 12.1% to 4.07p and contracted annual rental income rising to £204.2m from £202.2m at the start of the period. The FTSE 250 company said the growth was driven by rent reviews and a strong collection rate of 100%, while it also achieved sector-leading cost ratios.

Despite a slight valuation decrease of 4.1%, LXi REIT said its independently-valued portfolio remained resilient, comprising 348 properties valued at £3.2bn with a long-term weighted average unexpired lease term to first break or expiry of 26 years.

The company said it maintained a strong balance sheet with a pro forma net loan-to-value ratio of 38%, as it executed significant debt refinancing, further securing its financial position.

Looking ahead, the company said it was aiming to continue owning profitable assets in stable sectors, offering reliable, inflation-protected income returns with potential capital growth.

Strategies like capital recycling, diversification, and proactive asset management were expected to drive shareholder returns despite economic challenges.

"We are continuing to actively manage the portfolio, with disposals pursued to reduce leverage, recycle capital and reduce our top tenant concentration," said chairman Cyrus Ardalan.

"£32.6m of disposal proceeds were generated in the half-year, with the company under offer and in solicitors' hands on the disposal of approximately £220m of assets, at no less than book value, which would lower current loan-to-value from 38% to 34%.

"Notwithstanding the challenging wider economic headwinds, we remain confident that the underlying characteristics of our carefully curated long income portfolio of key operating assets in structurally supported sectors, enhanced by our proactive accretive recycling of capital and asset management strategies, will enable the group to continue to deliver reliable and growing income, and with the potential for capital growth and outperformance over the medium term."

At 1003 GMT, shares in LXi REIT were up 0.21% at 95.6p.

Reporting by Josh White for Sharecast.com.