Elite UK Reit posts 5.8% rise in H2 DPU to 1.47 pence

THE manager of Elite UK Reit on Monday (Feb 10) posted a distribution per unit (DPU) of 1.47 pence for the second half (H2) ended Dec 31, representing a payout ratio of 95 per cent.

This was 5.8 per cent higher than the 1.33 pence paid in the year-ago period, which was based on a payout ratio of 90 per cent. DPU for the year-ago period was adjusted based on FY2024’s weighted average units in issue of 593.4 million.

The manager attributed the increase in distribution payout ratio to the steady increase in portfolio valuation and a healthier financial position.

This brings full-year DPU to 2.87 pence, an increase of 5 per cent on the year. This was attributed to interest and tax savings. The distribution for H2 will be paid out on Mar 28, after the record date on Feb 18.

Revenue for the half-year period fell 0.9 per cent to £18.4 million from £18.5 million. Excluding the effect of straight-line rent adjustments, revenue declined 1.7 per cent on the year to £18.9 million.

Net property income (NPI) fell 15.2 per cent to £18.1 million from £21.4 million. Excluding the effect of straight-line rent adjustments, NPI declined 15.5 per cent to £18.6 million.

Meanwhile, the amount available for distribution to unitholders after retention rose 7.5 per cent to £8.5 million from £7.9 million.

For the full year, revenue fell 3.1 per cent to £36.5 million from £37.6 million, while NPI declined 12.1 per cent to £36.3 million from £41.4 million. Excluding the effect of straight-line rent adjustments, revenue and NPI fell 1.2 per cent and 10.3 per cent, respectively.

The decline in revenue was attributed to non-income generating vacant assets. This was, however, offset by rental reversions for Dallas Court, Salford and Theatre Buildings, Billingham.

The amount available for distribution to unitholders after retention rose 7.5 per cent to £8.5 million from £7.9 million.

Elite UK Reit’s portfolio occupancy rose to 93.9 per cent as at end-December from 92.3 per cent in the year-ago period. The manager noted that portfolio occupancy “is set to improve further to 95.6 per cent” after the divestments of Hilden House, Warrington and St Paul’s House, Chippenham are completed. 

As at end-December, Elite UK Reit’s portfolio valuation stood at £416.2 million, an increase of 1.2 per cent from £411.1 million in the previous year. Its weighted average lease expiry was 3.3 years.

Gearing as at end-December stood at 42.5 per cent, down five percentage points on the year. The manager noted that there are no further refinancing requirements until 2027.

Joshua Liaw, chief executive of Elite UK Reit’s manager said: “Having expanded our investment mandate to the living sector, we continue to explore opportunities in asset classes such as student housing and built-to-rent residential, which will further strengthen our portfolio.”

He pointed out that government-tenanted properties “remain an attractive investment proposition” and that Elite UK Reit is engaging its tenants on early lease renewals ahead of expiry in 2028, which it hopes to provide greater visibility on this year.

Units of Elite UK Reit were up 3.3 per cent or £0.01 at £0.31 as at 11.25 am on Monday.