Elite UK Reit posts 19.5% lower H1 DPU of £0.014
Distributable income falls 1.7% to £9.2 million
ELITE UK Real Estate Investment Trust’s (Reit) distribution per unit (DPU) for the first half of the year fell 19.5 per cent to £0.014 from £0.0174 in the corresponding period the year before, based on a 90 per cent payout ratio.
The manager of the trust on Wednesday (Aug 7) also posted a half-year revenue of £18.6 million (S$31.3 million), down 0.6 per cent from £18.7 million in H1 FY2023.
This decline was attributed to a lower asset base, compared to the first half of the previous year.
The manager, however, noted that a better comparison across the first halves of FY2023 and 2024 should be based on the units in issue as at Jun 30, 2024.
This means that for a like-for-like comparison, adjusted DPU for the first half of FY2023 was £0.0143 – based on the units in issue in H1 FY2024.
Elite UK Reit posted a 4.7 per cent year-on-year fall in net property income (NPI) to £18.7 million, from £19.6 million in the first half of FY2023.
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First-half distributable income for FY2024 was £9.2 million, down 1.7 per cent from £9.3 million in the year-ago period.
An increase in vacancy-holding costs due to timing weighed on the trust’s NPI and distributable income, the manager said. However, it noted that income had stabilised over the past year, following rental from lease re-gearing and cost savings from lower debt.
Chief executive of the manager Joshua Liaw said: “Using the proceeds from fundraising and capital recycling, we reduced our borrowings by £38 million and lowered our gearing to 41.4 per cent.”
In the first half of FY2023, net gearing ratio for the Reit was higher at 47.5 per cent.
The Reit’s debt headroom increased to £57.9 million, with no further refinancing requirements until 2027, and an interest coverage ratio of three times.
In July, the Reit secured £215 million of sustainability-linked loans and revolving credit facilities. This was to refinance the trust’s loan facilities due between 2024 and 2026.
As at Jun 30, portfolio occupancy remained stable at 92.3 per cent, with a weighted average lease expiry of 3.8 years.
The manager of the Reit expects a brighter market outlook after the Labour Party returned to government in the UK. The Reit could benefit from one of the Labour Party’s key priorities, which is to boost growth by increasing homebuilding and infrastructure projects.
About 90 per cent of the Reit’s assets are used for public-facing Jobscentre Plus, a government-funded employment agency in the UK. This comes as the trust expands into living-sector assets with locations suitable for conversion into student housing or build-to-rent residences.
As it continues to collect all of its rent a quarter in advance, unitholders can expect stable income to continue, the manager added.
Units of Elite UK Reit ended flat on Tuesday at £0.24.
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