These three new properties, all leased to the UK government, generate an annual gross income of £0.8 million and provide a gross rental income yield of 9.2%, which beats the REIT’s existing portfolio yield of 9.0% as at March 31.
On a pro forma basis as at March 31, the new properties are expected to be 0.6% DPU accretive and gearing would have reduced by 20 bps to 43.2%.
The properties have a long WALE of 7.4 years by GRI as at March 31.
Upon completion, the proportion of leases expiring in 2028 decreases by 220 basis points to 95.7% with no leases expiring before 2028.
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On a pro forma basis as at March 31, the WALE of Elite UK REIT’s portfolio would have increased to 3.2 years from 3.1 years.
“The mission-critical national infrastructure to be acquired dovetails with our proposition of offering investors counter-cyclical income backed by non-discretionary assets amidst macro uncertainty," says CEO of the manager Joshua Liaw.
Upon completion of the acquisition, the REIT's enlarged portfolio of properties in the UK will deliver a higher portfolio yield and positive reversionary potential from stable government-backed income stream with triple-net leases and rents collected in advance.
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"The tenant and geographical mix will also be further diversified, with the portfolio strengthened and more resilient. This transaction is also aligned with the manager’s commitment to continue to reduce portfolio gearing as well as deliver accretive acquisitions to enhance value for our unitholders,” says Liaw.
As of March 31, Elite UK REIT’s portfolio comprised 148 properties of which 136 properties were occupied by the Department for Work and Pensions. Two of the new properties, Priory Court, Dover and Customs House, Felixstowe — are tenanted to the Home Office, an existing tenant.
The third new property, Tŷ Merlin, Carmarthen, adds a new tenant to the REIT, the Department for Environment, Food and Rural Affairs, which is responsible for improving and protecting the environment.
Elite UK REIT reiterates that rental income is collected three months in advance. The leases are on triple-net basis.
Elite UK REIT units, which were halted prior to this announcement, last traded at 33.5 pence.
