Elite Commercial Reit posts 20.3% rise in Q3 DPU to 1.48 pence

ELITE Commercial Reit's MXNU : MXNU 0% distribution per unit (DPU) rose by 20.3 per cent to 1.48 pence for its third quarter ended Sep 30, from 1.23 pence a year ago.

The DPU was also 20.3 per cent higher than the 1.23 pence the real estate investment trust (Reit) had forecast upon its initial public offering (IPO), completed in February 2020.

Revenue was up 61.7 per cent to £9.4 million (S$17.4 million) for the quarter, from £5.8 million a year ago, and also up 60.4 per cent from its IPO projection of £5.9 million.

The Reit's results were bolstered mainly by contributions from its maiden acquisition of 58 properties in the UK for £212.5 million, the manager said in its Q3 business update on Monday (Nov 1).

Income available for distribution rose 71.8 per cent on year to £7.1 million from £4.1 million, and was also 70.6 per cent higher than its IPO forecast.

Meanwhile, the listing of the Reit's wholly-owned subsidiary, Elite UK Commercial Holdings (ECHL), on The International Stock Exchange, has qualified ECHL and its subsidiaries as a UK Reit group.

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This put its tax treatment on par with that of other listed UK Reits, with headline tax for ECHL reduced to 15 per cent from 19 per cent, the manager said.

With the qualification, the Reit's individual properties' historical valuation are also allowed to be rebased to their current valuations, which eliminates previously recognised deferred tax liabilities due to latent capital gains.

Following these corporate developments, net asset value of the Reit has improved slightly from £0.62 as at Jun 30 to £0.63 as at Sep 30, the manager said. 

Shaldine Wang, chief executive of the manager, said: "Our consistent growth is attributed to the stable income generated by our unique and defensive portfolio, and the resilient nature of our tenants."

"We are constantly looking for growth opportunities as well as ways to augment distributable income for our unitholders and improve our capital structure," she added.

The Reit's portfolio remains 100 per cent occupied as at Sep 30, 2021, with 100 per cent of rent for the 3-month period of October to December collected in advance and within 7 days of the due date.

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

Additionally, after the recent exercise of the lease break option for the Reit's East Street, Epson property, the manager said it is evaluating between the potential sale of the asset at £2.9 million - 21 per cent above its valuation of £2.4 million, and a proposal to retain the Reit's major tenant, the Department for Work and Pensions.

The manager is also evaluating various re-marketing and development options available for its John Street, Sunderland property, after its lease break option was exercised.

Units of the Reit closed at 66.5 pence on Friday (Oct 29), down 0.5 pence or 0.8 per cent.

READ MORE: Elite Commercial Reit targets S$1 billion market cap to wow investors