Elite Commercial REIT has reported stable distributable income of £18.2 million for 9MFY2022 ended Sept 30. Revenue, meanwhile, was up 10.3% to £27.9 million.
The REIT gave this business update on Nov 4.
For the 9MFY2022, distribution per unit was down 7.8% y-o-y to 3.79 pence, mainly because the manager has opted to take its fees in cash instead of units. Higher borrowing costs as well as a larger equity base over the same period last year weighed down on the DPU too.
On the other hand, the REIT enjoyed a full period of rental contribution from its recent acquisition and tax savings from a lower headline tax rate.
As at Sept 30, the REIT’s portfolio was 97.9% occupied, with 99.9% of rent for the three-month period from October to December 2022 collected in advance and within seven days of the due date.
The portfolio’s weighted average lease expiry was 5 years as at Sept 30.
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“Our portfolio’s financial performance remains resilient despite the ongoing volatile macroeconomic environment, both globally and in the UK," says Shaldine Wang, CEO of the REIT's manager.
"The manager is focused on a unique class of commercial assets with over 99% leased to the UK Government, and is therefore well-positioned to continue to provide income certainty and visibility.
"This further validates our investment thesis as a stable REIT with the unique attributes to remain resilient through economic cycles and provide room for growth with built-in inflation-linked rental step-up," she adds.
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Wang adds that the REIT manager has completed the extension of the £94 million loan facility ahead of schedule, which helps to remove uncertainties pertaining to upcoming debt maturities in a volatile market.
"It reflects the prudent capital management efforts taken by the Manager to augment the financial position of the REIT," she adds.
With the extension, the REIT no longer has material borrowings due this coming FY2023.
Currently, 68% of its interest rate exposure is on fixed terms, and therefore, the impact of rising rates is seen to be "largely mitigated."
The REIT also points out that its assets, liabilities and distributions are all denominated in British pounds, therefore, providing a natural hedge which limits foreign currency exchange impact to only unitholder investments made in other currencies, and unitholders who have opted to receive distributions
in Singapore dollars.
"The manager continues to monitor the political and market developments in the UK closely."