At the same time, DWP also administers claims for benefits such as income support, incapacity benefit, universal credit, jobseeker’s allowance, and employment support allowance.
Jobcentre Plus provides training opportunities and resources to enable job-searchers to find work, through Jobpoints, which is a touch-screen computer terminal at the office that can be used to apply for jobs using either telephones or website.
“Our site visit across London, Kent, and Cardiff confirmed our views that the visited jobcentres are operationally critical to DWP’s daily service delivery, financial support claimant volumes at the jobcentres are at record highs and rising and select assets offer repositioning optionality,” says PhillipCapital's Hashim Osman in his May 25 note.
The REIT continues to achieve portfolio stability as it recently signed new leases with DWP in February, which secured CPI-linked rents which are floored at 1% and capped at 5% per annum and will commence in April 2028, says Hashim, who is keeping his “buy” call with unchanged DDM-based target price of £0.41.
The recent site visit reinforced the critical nature of Elite UK REIT’s UK Government social infrastructure portfolio, says RHB Bank Singapore’s Vijay Natarajan in his May 28 note.
“Although some of the assets could be consolidated in future, Elite UK REIT’s pivot into the living sector offers repurposing ability to extract upside potential from housing supply shortage in the UK,” says Natarajan.
Some of his takeaways were that DWP's physical offices remain critical with rising unemployment and transforming job market and asset utilisation from tenants and end users have improved.
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“Furthermore, prime asset location and standalone facilities with freehold land title provide good alternate usage such as living sector opportunities in the medium-term, while the shortage of quality living sector assets due to permit and construction delays, against the backdrop of a strong demand,” Natarajan adds.
At the same time, despite the rising concerns over inflationary impact from the Middle East conflict, Natarajan shares that Elite UK REIT’s portfolio is partially mitigated from triple-net leases and strong government tenant credit profile.
As such, Natarajan is keeping a “buy” call on Elite UK REIT and a target price of £0.41. This translates to a potential 21% upside and 9% distribution yield. “While the REIT is not fully immune to macroeconomic headwinds in the UK, its stable cash flow profile from the sovereign tenant offers value at 9% distribution yield,” the analyst concludes.
As of 1.58pm, Units in Elite UK REIT are trading flat at £0.34.
