Elite UK Reit Acquires Government-Leased Assets for £9.2 Million to Strengthen Portfolio Stability

Elite UK Real Estate Investment Trust (Reit) has announced the acquisition of three freehold infrastructure assets in the United Kingdom for £9.2 million. All three properties are fully leased to the UK government and were secured at a 7.6% discount to the average of independent valuations. The acquisition is part of the Reit’s ongoing strategy to enhance portfolio resilience through high-quality, long-duration tenancies.

To partially finance the acquisition, the Reit has launched a private placement to raise approximately £4 million. This will involve issuing around 13.3 million new units, priced between £0.295 and £0.305 per unit. The transaction is expected to be distribution-per-unit (DPU) accretive and will also reduce the Reit’s gearing from 43.4% to 43.2%, reflecting prudent capital management.

The newly acquired assets are expected to generate an annual gross income of £0.8 million, delivering a rental yield of 9.2%. This exceeds the Reit’s existing portfolio yield of 9.0% as of March 31, 2024. On a pro forma basis, the acquisition is projected to be 0.6% accretive to FY2024 DPU, providing incremental value to unitholders.

A key feature of the transaction is the extended lease duration. The acquired properties have a weighted average lease expiry (WALE) of 7.4 years, more than doubling the Reit’s current WALE of 3.1 years. Post-acquisition, the overall portfolio WALE will increase to 3.2 years. Furthermore, lease expiry concentration is expected to improve significantly, with no leases maturing before 2028.

This acquisition also improves tenant diversification and reduces lease concentration risk. The proportion of leases expiring in 2028 will fall by 220 basis points to 95.7%, enhancing the predictability of cash flows and further strengthening the portfolio’s defensive qualities.

Joshua Liaw, Chief Executive Officer of the Reit’s manager, stated: “This acquisition of mission-critical national infrastructure aligns with our strategic focus on securing long-term, counter-cyclical income. By adding high-quality government leases to our portfolio, we continue to build a more stable and diversified income stream for our investors.”