Based on the stated gross rental income of GBP0.8m, the purchase price translates into a gross rental income yield of 9.2%.
To help fund the acquisition, the REIT has raised GBP4 million from a private placement at 29.5 pence per new unit.
Elite UK REIT says that on a pro-forma basis, FY2024 distribution per unit accretion is estimated to be 0.6%. Following the fundraising its gearing ratio is likely to drip from 43.4% to 43.2%.
"In addition to these new acquisitions, we believe Elite UK REIT is well placed to focus on portfolio optimisation through opportunistic divestments and capital recycling to strengthen its balance sheet," state CGS International analysts Lock Mun Yee and Li Jialin in their June 10 note, where they kept their "add" call and 35 pence target price.
They like the REIT's attractive FY2025 yield of 8.8%, at a 92% payout ratio.
Re-rating catalysts include faster-than-projected capital recycling activities while downside risks include tenant concentration in the Department for Work and Pensions, the main tenant.
In a separate June 10 note, DBS Group Research likes how these three new properties will help diversify the tenant base and also lease expiry spread. Plus, there is no near-term capex needed.
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"Importantly, all three properties offer organic growth potential, with current contracted rents estimated to be 40–50% below prevailing market levels. The leases are subject to upward-only rent reviews every five years, which are not inflation-linked and have no cap on rental increases," says DBS, whose "buy" call and target price of 36 pence remains.
Elite UK REIT had earlier announced plans for a data centre repositioning project at Blackpool, which remains a "key strategic priority".
"While approval has yet to be granted, management is reasonably confident of receiving it within one to two months, with a divestment targeted within this financial year," says DBS.
"We remain positive on Elite’s proactive asset management approach, which continues to gain traction through lease renewals, capital recycling, and repositioning efforts, complemented by its efforts to diversify its tenant base while still maintaining the stability of government-backed income streams," adds DBS.
Elite UK REIT units changed hands at 33 pence as at 11.16 am.
