Elite Commercial Reit posts 7.8% lower DPU despite higher revenue

ELITE Commercial Reit's distribution per unit (DPU) for the first nine months of FY2022 shrank by 7.8 per cent to 3.79 pence, from 4.11 pence in the corresponding financial period a year ago.

This came despite a 10.3 per cent rise in the real estate investment trust's (Reit) revenue for the period to £27.9 million (S$44.3 million), compared with £25.3 million previously. Income generated for distribution to unitholders fell 0.3 per cent to £18.17 million from £18.22 million. 

The 9M DPU includes an interim distribution of 2.56 pence per unit which the Reit declared on Aug 5, and paid out on Sep 22.

In a Q3 business update on Friday (Nov 4), the Reit's manager said that the decline in DPU for the first nine months was due mainly to the election of the manager's fees in cash; increased borrowings for the full period, as well as interest cost on borrowings; a slightly lower occupancy rate; and an enlarged equity base year on year.

These were partially offset by the full period of rental contribution from the Reit's maiden acquisition and tax savings from a lower headline tax rate. The Reit's manager has also extended the maturity of a £94 million loan ahead of schedule - which helps remove "uncertainties pertaining to upcoming debt maturities in a volatile market", said Shaldine Wang, chief executive of the manager.

The loan extension has adjusted aggregate borrowing to about 4.2 per cent, with an improved weighted average debt maturity of 2.2 years and 68* per cent of interest rate exposure fixed.

As at Sep 30, 2022, the trust had a gearing ratio of 41.9 per cent, while net asset value per unit stood at £0.61. 

Elite Commercial Reit's occupancy portfolio stood at 97.9 per cent as at Sep 30, with 99.9 per cent of rent for the three-month period of October to December collected in advance. The portfolio's weighted average lease expiry is five years.

Units of the Reit opened 2 per cent or £0.01 up at £0.50 on Friday, after the release of the results.

Amendment note: An earlier version of this story incorrectly stated that 60 per cent of the Reit's interest rate exposure was fixed following aggregate borrowing adjustments. It has since been amended to reflect the correct figure of 68 per cent.

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