Real estate investment firm to provide £10m forward funded investment for new Bradford retail park

LXi REIT plc, the real estate investment trust, has exchanged contracts to provide forward funding for the development of a new discount retail park in Bradford, pre-let to Aldi and T. J. Morris Limited (trading as Home Bargains).

The development represents an investment of £10m, reflecting a blended net initial yield of 6.15% on the asset acquisition (net of acquisition costs to the Company).

Situated on a 6.4 acre site with parking for 210 cars, the scheme strategically located 2.5 miles west of Bradford City centre, eight miles north west of Leeds and 13 miles south west of Harrogate.

The development will be anchored by a new 20,000 sq ft food store, which has been pre-let to Aldi Stores Limited, the principal UK trading company of the Aldi group.

In addition, a 16,000 sq ft unit has been pre-let to T. J. Morris Limited (trading as Home Bargains), and a further 5,000 sq ft unit has been pre-let to Heron Foods Limited, a discount food retailer, with 240 stores throughout the Midlands and North of England.

The property includes an additional 5,000 sq ft retail unit which the developer has commenced marketing of. Until let, the developer is providing a fully cash-backed rental guarantee for a five-year term, covering rent at the target level, along with outgoings, service charge and business rates. The developer is obliged to let this unit on an index-linked lease.

The Aldi and Home Bargains pre-lets have been exchanged and LXi REIT is acquiring the land and forward funding on a fixed-price basis, with completion of the purchase subject to receipt of planning consent, which is expected next month, and exchange of the Heron Foods Limited lease. The developer will pay LXi REIT a licence fee during the construction period.

LXi REIT is funding the acquisition from equity resources, with senior debt finance expected to be introduced in the near term.

John White, Partner of LXi REIT Advisors Limited, commented: “We are delighted to provide the forward funding for this new discount retail development anchored by Aldi and Home Bargains.

“Aldi and Home Bargains are very strong tenants and successful companies in the fast growing discount retail sector.

“The 6.15% net initial yield is above the Company’s target average yield and the property will benefit from a strong residual value given the dense catchment population and low starting rents.

“We are also in advanced discussions on a number of similar discount retail projects as well as additional pre-let forward fundings and built assets in other sectors, which are expected to come to fruition shortly.”

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