Elite UK REIT's manager has announced it has concluded negotiations and entered into new lease agreements with The Secretary of State for Housing, Communities and Local Government of the United Kingdom (the Tenant) for properties occupied by the Department for Work and Pensions (DWP) (New Lease Agreements).
The aggregate annual rent under the New Lease Agreements, prior to subsequent CPI-linked rent reviews, is GBP24.3 million.
There are no lease expiries from now till 2028. Lease tenures under the New Lease Agreements have tenures of up to ten years. Following the New Lease Agreements, expiries in 2028 is materially derisked and lowered from 95.7% of gross rental income to 32.0%. The REIT’s portfolio’s WALE also improves to 7.2 years on a pro forma basis as at Dec 31 2025.
The New Lease Agreements will commence in 2028, immediately after the expiry of existing lease agreements. Under the New Lease Agreements, lease expiries are well-distributed across ten, seven, three and one years.
Unlike the existing lease agreements, there are no lease breaks in the New Lease Agreements. The DWP will also have an option to renew the New Lease Agreements for a further five years, for new leases of five years or more; and a further three years, for new leases of three years or less (Option Leases).
The aggregate annual rent under the New Lease Agreements remains at GBP24.3 million per annum, including for the financial year ending Dec 31 2026.
See also: Suntec REIT plans to return home
These New Lease Agreements have an in-built rent review on April 1 2033, the fifth anniversary from April 1 2028, that is subject to an annually compounded CPI-linked rent reversion, with a minimum increase of 1% and a maximum of 5%. Rent upon the exercise of Option Leases will also be subject to this CPI-linked rent reversion.
Elite UK REIT closed at GPB0.36 on Feb 4 and is up 14% over a one-year period.
