Funding in place for 13 separate Starbucks and Costa drive-thrus
LXI REIT, the specialist inflation-protected very long income REIT, has exchanged contracts to fund the development of 12 new Starbucks drive-thru’s and one new site for Costa for a combined £23.4m, reflecting a 5.7% net initial yield.
Each property will comprise a new drive-thru format coffee shop and the sites are well located across Great Britain in Barry, Blackpool, Cambourne, Canvey Island, Cardiff, Carmarthen, Newcastle Under Lyme, Northampton, Nottingham, Peterborough, Preston, Redditch and Stoke.
Each of the properties is to be let on an unbroken lease of 15 years from completion of the building works, with five yearly rent reviews index-linked to RPI inflation (collared at 1% per annum and capped at 4% per annum compound).
Building works are due to complete in Q3 2019 and LXI will receive an income from the developer during the construction period.
LXI partner Simon Lee said: “This transaction provides our investors with rare access to the strong Starbucks and Costa covenants in scale and the individually granular lot sizes, forward funding structure and off-market nature of the purchase have delivered a highly attractive yield, coupled with RPI-linked rental uplifts and capital growth potential.”
