ELITE Commercial Reit’s distribution per unit (DPU) for the first quarter ended March 2024 declined 21.2 per cent year on year to £0.0067 from £0.0085, based on a 90 per cent payout ratio.
In a business update on Friday (May 3), the manager said that at a 100 per cent payout ratio, DPU for Q1 FY2024 would be £0.0074 or 21.3 per cent down from Q1 FY2023 DPU of £0.0094.
Revenue for the quarter rose a marginal 0.8 per cent to £9.2 million (S$15.6 million), mainly due to rent escalations which took effect in April 2023.
This was however offset in part by non-income generating assets and vacancy holding costs, resulting in net property income falling 3.7 per cent to £8.3 million.
The amount generated during the first quarter for distribution to unitholders was down 3.5 per cent year on year at £4.4 million.
The DPU decline was also attributed to an enlarged equity base following the real estate investment trust’s (Reit) preferential offering which was completed on Jan 18, 2024.
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Including proceeds from the £28 million preferential offering, the manager estimated that the Reit has a debt headroom of £55 million, as its net gearing stood at 41.5 per cent as at end-March 2024.
Its portfolio was 92.3 per cent occupied with rents collected in advance, with a weighted average lease expiry of four years.
Leases were on a triple-net basis – with the tenant responsible for repairing the external, internal parts and the property’s structure for occupied assets – for which the majority are signed directly with the UK government.
This provides credit stability and income certainty for the Reit, said the manager, adding that it has started early negotiations on tenant retention and lease expiry diversification.
Joshua Liaw, chief executive of the manager, said: “While market uncertainty persists, we have reinforced our capital structure with new credit facilities and have started putting our asset repositioning strategies into action.”
He said the manager has “identified several potential opportunities” in the Reit’s portfolio, with its expanded investment mandate to include the living sector.
He also noted a supply-demand imbalance faced by the UK student housing market and build-to-rent segments, which “presents an opportunity for (the Reit’s) assets to be repositioned to fill this gap”.
Units of Elite Commercial Reit : MXNU 0% ended flat on Friday at £0.24.
