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Elite Commercial REIT posts 3Q21 DPU of 1.48 pence, 20.3% above IPO projection

Atiqah Mokhtar
Atiqah Mokhtar • 3 min read
Elite Commercial REIT posts 3Q21 DPU of 1.48 pence, 20.3% above IPO projection
The REIT's portfolio remains 100% occupied, with a WALE of 6.4 years.
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The manager of Elit Commercial REIT has reported a distribution per unit (DPU) of 1.48 British pence (2.72 cents) for the 3QFY2021 ended September, 20.3% above the previous year.

The 3QFY2021 DPU is also 20.3% above the REIT’s IPO projection for the period of 1.23 pence.

Income available for distribution for the period surged 71.8% y-o-y to GBP7.06 million, or 70.6% higher than the IPO projection of GBP4.14 million.

Revenue for the 3QFY2021 grew 61.7% y-oy to GBP9.4 million, or 60.4% higher than the IPO projection of GBP5.87 million.

See: Elite Commercial REIT completes listing of subsidiary on TISE

According to the manager, the REIT continues to be bolstered by its maiden acquisition of 58 commercial properties in the UK for GBP212.5 million on March 9.

See also: Fortress Minerals reports 7.6% lower y-o-y earnings for 1QFY2025

The REIT’s portfolio remains 100% occupied as at Sept 30, with a weighted average lease to expiry (WALE) of 6.4 years. 100% of rent for the three-month period of October to December was collected in advance and within seven days of the due date.

In terms of notable property developments, the Manager is currently evaluating two options for the REIT’s East Street, Epsom property in the UK following the recent exercise of its lease break option.

The options under evaluation are a potential sale of the asset at an offer price of GBP2.9 million - approximately 21% above the valuation of GBP2.4 million, and a proposal to retain the REIT’s major tenant, the Department for Work and Pensions (DWP) has been submitted to DWP for their considerations.

See also: Temasek’s net portfolio value up 1.83% y-o-y to $389 bil on its 50th anniversary

The manager also recently completed the rent review of the Dallas Court Units 1-2, Salford property with an approximately 7% uplift in rent. Besides that, the lease break option for John Street, Sunderland has been exercised, with the lease to expire on Mar 31, 2022. The manager is currently evaluating various re-marketing and development options available for the property.

During the third quarter, the REIT’s wholly-owned subsidiary Elite UK Commercial Holdings (ECHL) was admitted into the International Stock Exchange (TISE). The admission qualifies ECHL and its subsidiaries as a UK REIT group, allowing the group to enjoy favourable tax treatment for its UK property rental business.

Following the corporate developments arising from the ECHL’s qualification as a UK REIT group, net asset value of the REIT has improved slightly from 62 pence as at June 30 to 63 pence as at Sept 30.

Looking ahead, the manager highlights that the UK economy has been boosted by a waning impact from Covid-19 and higher vaccination rates. The economy grew 0.4% in August but remains 0.8% below its pre-pandemic level, according to government statistics.

The manager will be electing to receive 100% of its management fees in cash from FY2022 onwards to strengthen the REIT’s financial position in the long term and preserve value for unitholders. “The current yield profile of the REIT allows for the transition to be made comfortably and the manager will review the election mix periodically,” the manager states.

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The manager continues to be focused on growth opportunities via acquisition of yield-accretive assets that are on long-term leases to various UK government agencies, with opportunities available to the REIT through its sponsors’ right of first refusal pipeline and from third-party transactions in the open market.

Units in Elite Commercial REIT closed at 66.5 pence on Oct 29.

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