According to her, the revaluation at Elite UK REIT was primarily driven by the lease re-gear with its key tenant, the Department for Work and Pensions (DWP), which materially strengthened income visibility and extended portfolio WALE to 7.2 years.
“Meanwhile, Peel Park saw a £4 million uplift (10%) in valuation after securing planning approval for conversion into an 80MW data centre. With a low yield of 4.4%, this presents a clear opportunity for value crystallisation, either through divestment or via a capital partner, with proceeds potentially redeployed into higher-yielding acquisitions, which could be at a range of between 8.25%–9.25%,” Foo adds.
From Foo’s perspective, this latest valuation uplift is a positive inflection point for Elite UK REIT, underscoring management’s disciplined execution of value-accretive initiatives.
“The extension of DWP leases meaningfully de-risks near-term income, while planning approvals and asset repositioning initiatives (including potential PBSA conversions) enhance embedded optionality within the portfolio,” Foo states.
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As such, Foo believes that these efforts will be able to support a sustained NAV re-rating over the medium term.
“Hence, we are keeping a “buy” call on Elite UK REIT and maintain a target price of £0.40. Currently, the REIT is trading at 0.7 times P/B ratio and offers a prospective FY2026 and FY2027 distribution yield of 9.3% and 9.5% respectively,” Foo concludes.
As at 9.18am, units in Elite UK REIT are trading flat at £0.335.
