Elite Commercial Reit Q1 DPU up 4.9% on maiden acquisition's contribution, tax savings

ELITE Commercial Reit : MXNU 0%’s distribution per unit (DPU) rose 4.9 per cent to 1.28 pence for its first quarter ended Mar 31, 2022, from 1.22 pence a year ago.

In the quarter, the UK-focused real estate investment trust (Reit) recorded a full quarter of contribution from its maiden acquisition, and it also had tax savings from the admission of Elite UK Commercial Holdings as a UK Reit group, although this was offset by a slightly enlarged equity base, the manager said on Friday (Apr 29).

Gross revenue was up 39.4 per cent to £9.2 million (S$15.9 million) for the quarter, from £6.6 million a year ago.

Distributable income rose 36.2 per cent on year to £6.1 million, from £4.5 million a year ago.

The Reit saw positive outcomes from its major lease re-gearing exercise, where it removed a number of lease break options that were set to occur in March 2023 to enhance lease stability.

It had the option removed from 109 assets occupied by the UK’s Department for Work and Pensions (DWP) and Ministry of Defence (MOD), which it said provides lease stability and income visibility until March 2028 for 85.2 per cent of its total portfolio.

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Noting that the rest of its lease terms remain unchanged, the manager expects the Reit will also benefit from built-in rent escalation in 2023.

Meanwhile, for the 8 assets that have opted for the break options, the manager is actively marketing them, with the assets most likely used as office space.

The Reit has a full portfolio occupancy rate as at Mar 31, while its weighted average lease expiry stood at 5.5 years.

Additionally, the manager noted that it has secured sustainability collaborations with DWP and MOD in the quarter, where it would invest around £14.8 million over 3 years in DWP and MOD-occupied assets to boost the energy efficiency of the underlying buildings and ensure that the properties remain relevant in an increasingly sustainability-focused environment.

Looking ahead, as job vacancies still remain “significantly high” in the UK, the manager said this would emphasise the importance of DW’s services to UK citizens.

The manager expects the Reit will continue providing a stable income to unitholders as it continues to collect close to 100 per cent of the rent in advance.

Units of Elite Commercial Reit closed up £0.005 or 0.8 per cent at £0.645 on Thursday.