Elite Commercial Reit posts 19.6% lower DPU for H2 on vacant investment properties
Michelle Zhu
ELITE Commercial Reit reported a 19.6 per cent drop in distribution per unit (DPU) for the half year ended December 2022 to 2.25 pence, from 2.8 pence in H2 FY2021.
This came as two vacant investment properties resulted in lower income and higher property operating expenses, said the manager on Tuesday (Feb 14).
Revenue declined 2.5 per cent to £18.4 million (S$29.7 million) from £18.8 million, while net property income fell 3.8 per cent to £17.6 million from £18.3 million previously.
Property operating expenses rose 47.4 per cent to £728,000 from just £494,000 the previous year, as maintenance costs of the vacant properties – which were previously borne by the tenant – are now being borne by the real estate investment trust (Reit).
Income available for distribution to unitholders for H2 FY2022 fell 18.8 per cent to £10.9 million from £13.4 million.
For the full year ended December 2022, Elite Commercial Reit’s DPU declined 11.4 per cent to 4.81 pence from 5.43 pence in FY2021, which included an advanced DPU of 0.9 pence paid out in April 2021.
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Payment is expected to be made on Mar 30 after the record date on Feb 22.
Revenue grew 6.7 per cent year on year to £37.1 million from £34.7 million, while net property income rose 6 per cent to £35.7 million from £33.7 million.
Income available for distribution to unitholders, however, fell 5.8 per cent to £23.1 million from £24.5 million previously, mainly due to increased borrowings and interest cost on borrowings as well as lower occupancy rate from vacancies at the two assets.
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As at Dec 31, 2022, the Reit’s portfolio occupancy stood at 97.9 per cent, with a weighted average lease expiry of 4.8 years and gearing ratio of 45.8 per cent.
Net asset value per unit stood at 52 pence, compared with 61 pence as at end-2021.
The valuation of the Reit’s portfolio of 155 properties stood at £466.2 million as at end-2022, down 9.9 per cent from the £517.7 million portfolio valuation reported as at end-June 2022.
The manager said this decline was attributed mainly to “widely reported market factors” including the impact of rising interest rates on financing cost, which resulted in weaker demand for real estate investment and declining transaction volumes.
In its outlook, the Reit manager said it is cognisant of the risks of the ongoing macroeconomic uncertainty. It remains on the lookout for growth opportunities, which may be available through the Reit sponsors’ right of first refusal pipeline, or from the open market.
Units of Elite Commercial Reit closed £0.02 or 3.81 per cent lower at £0.505 on Tuesday.
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