CGS International
June 10, 2025
Elite UK REIT Expands UK Portfolio: New Acquisitions, Yield Outlook, and Peer Analysis for 2025
Elite UK REIT: Strategic Portfolio Expansion and Financial Overview
Elite UK REIT (ELITE), a Singapore-listed real estate investment trust with a focus on UK government-tenanted assets, has announced the acquisition of three new properties, further strengthening its holdings and diversifying its tenant base. Here’s a comprehensive breakdown of ELITE’s latest moves, financial forecasts, ESG initiatives, and a comparative look at the S-REIT landscape.
Key Developments: Acquisition of Three UK Properties
ELITE is set to acquire three properties from Elite Phoenix Ltd, a subsidiary of Elite UK Commercial Fund III, for £9.2 million.
The purchase price is at a 7.6% discount to the average independent valuation, reflecting prudent capital management.
These assets offer a total net internal area of 139,967 sq ft, fully occupied by the UK Home Office and Department for Environment, Food & Rural Affairs (DEFRA).
The assets carry a weighted average lease expiry (WALE) of 7.4 years as of March 2025, providing long-term income visibility.
The gross rental income from these properties stands at £0.8 million, translating to a robust 9.2% gross rental income yield.
Portfolio Impact: Diversification and Resilience
Post-acquisition, ELITE’s portfolio will consist of 151 properties valued at £424.8 million, a 2.2% increase in asset value.
The addition of DEFRA as a new tenant reduces ELITE’s reliance on the Department for Work and Pensions (DWP); DWP’s rental contribution drops from 94.4% to 92.3%.
Portfolio WALE extends to 3.2 years (from 3.1 years), enhancing income stability and risk profile.
The portfolio remains geographically diversified across England and Wales.
Financing Structure: Private Placement and Gearing Outlook
ELITE funded the acquisition through a £4 million private placement and new debt facilities.
The placement was completed at £0.295 per unit.
Proforma FY24 DPU accretion is estimated at 0.6%.
Gearing is projected to decrease slightly from 43.4% to 43.2% post-fund raising.
Management maintains focus on portfolio optimization via asset recycling and opportunistic divestments to further bolster the balance sheet.
Financial Performance and Outlook
| Financial Metrics (£m) |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Gross Property Revenue |
37.64 |
36.47 |
37.67 |
37.67 |
37.67 |
| Net Property Income |
33.80 |
33.74 |
34.67 |
34.97 |
35.47 |
| Net Profit |
(29.74) |
17.89 |
14.25 |
15.21 |
15.11 |
| Distributable Profit |
16.24 |
16.82 |
17.49 |
17.45 |
17.53 |
| Core EPS (£) |
0.035 |
0.027 |
0.024 |
0.026 |
0.025 |
| Dividend Per Share (£) |
0.031 |
0.029 |
0.029 |
0.029 |
0.030 |
| Dividend Yield (%) |
9.16 |
8.57 |
8.79 |
8.77 |
8.81 |
| Asset Leverage (%) |
49.6 |
41.6 |
41.6 |
42.1 |
42.6 |
| Book Value Per Share (£) |
0.39 |
0.41 |
0.40 |
0.40 |
0.40 |
| Recurring ROE (%) |
7.89 |
6.90 |
5.93 |
6.39 |
6.40 |
The FY25F dividend yield is projected at 8.8%, assuming a 92% payout ratio, with an estimated total return of 13.3%.
Key catalysts for further upside include accelerated capital recycling and additional acquisitions.
Risks remain, notably high tenant concentration in the DWP.
Elite UK REIT Shareholder and Market Overview
Market Capitalization: US$267.2 million (£197.4 million)
Current Shares Outstanding: 587.1 million
Free Float: 58.6%
Major Shareholders: Partner Reinsurance (22.6%), Ho Lee Group Trust (7.6%), Sunway Re Cap Pte Ltd (11.2%)
Recent Price Performance:
1M: +13.6%
3M: +9.8%
12M: +39.6%
Peer Comparison: How ELITE Stacks Up Among S-REITs
| REIT |
Ticker |
Price (LC) |
Target Price (LC) |
Market Cap (US\$m) |
Asset Leverage (%) |
P/BV (x) |
Dividend Yield FY25F (%) |
Dividend Yield FY26F (%) |
Dividend Yield FY27F (%) |
| Hospitality |
|
| CapitaLand Ascott Trust |
CLAS SP |
0.87 |
1.13 |
2,584 |
39.9 |
1.15 |
7.0 |
7.3 |
7.3 |
| CDL Hospitality Trust |
CDREIT SP |
0.78 |
0.87 |
763 |
41.8 |
1.48 |
6.7 |
7.8 |
8.1 |
| Far East Hospitality Trust |
FEHT SP |
0.57 |
0.74 |
888 |
31.2 |
0.92 |
6.8 |
6.9 |
7.0 |
| Industrial |
|
| AIMS AMP |
AAREIT SP |
1.29 |
NA |
754 |
33.7 |
1.26 |
7.4 |
7.3 |
7.5 |
| CapitaLand Ascendas REIT |
CLAR SP |
2.58 |
3.10 |
9,235 |
38.9 |
2.20 |
6.0 |
6.1 |
6.3 |
| ESR-REIT |
EREIT SP |
2.29 |
3.55 |
1,428 |
42.8 |
2.75 |
9.5 |
9.9 |
10.0 |
| Frasers Logistics & Commercial Trust |
FLT SP |
0.81 |
1.11 |
2,375 |
36.1 |
1.08 |
7.1 |
6.7 |
6.7 |
| Office |
|
| Keppel REIT |
KREIT SP |
0.87 |
1.08 |
2,625 |
42.1 |
1.24 |
6.2 |
6.6 |
6.7 |
| OUE REIT |
OUEREIT SP |
0.29 |
0.33 |
1,220 |
40.6 |
0.59 |
7.1 |
7.5 |
7.8 |
| Suntec REIT |
SUN SP |
1.13 |
1.26 |
2,581 |
43.4 |
2.01 |
5.5 |
5.9 |
6.2 |
| Retail |
|
| CapitaLand Integrated Commercial |
CICT SP |
2.10 |
2.45 |
11,949 |
38.7 |
2.09 |
5.3 |
5.6 |
5.9 |
| Frasers Centrepoint Trust |
FCT SP |
2.16 |
2.70 |
3,406 |
38.6 |
2.22 |
5.6 |
5.8 |
5.9 |
| Lendlease Global Commercial REIT |
LREIT SP |
0.49 |
0.69 |
932 |
38.0 |
0.74 |
8.1 |
8.1 |
8.2 |
| Mapletree Pan Asia Commercial Trust |
MPACT SP |
1.21 |
1.48 |
4,960 |
37.7 |
1.78 |
6.6 |
6.9 |
7.0 |
| Overseas-Centric |
|
| CapitaLand China Trust |
CLCT SP |
0.69 |
NA |
916 |
42.6 |
1.09 |
8.4 |
8.5 |
8.6 |
| Elite UK REIT |
ELITE SP |
0.34 |
0.35 |
267 |
43.0 |
0.40 |
8.8 |
8.8 |
8.8 |
| Manulife US REIT |
MUST SP |
0.06 |
0.13 |
112 |
60.8 |
0.23 |
0.0 |
43.8 |
50.8 |
| Sasseur REIT |
SASSR SP |
0.63 |
0.85 |
615 |
25.9 |
0.83 |
9.8 |
10.1 |
10.4 |
| Healthcare |
|
| Parkway Life REIT |
PREIT SP |
4.05 |
4.91 |
2,055 |
36.1 |
2.42 |
3.8 |
4.2 |
4.3 |
ELITE stands out for its high dividend yield, attractive valuation, and moderate gearing, making it competitive among overseas-focused peers.
Environmental, Social, and Governance (ESG) Commitments
ELITE aligns its ESG efforts with the UK Government’s 2050 net-zero target.
Material ESG focus areas include climate change, energy, emissions, water, tenant engagement, talent development, diversity, and regulatory compliance.
Target: Achieve an EPC rating of B or higher for all properties by 2030.
£14.7 million is committed over three years (from 2022) to enhance sustainability and energy efficiency, especially in DWP and Ministry of Defence-occupied assets.
As of end-FY24, 98.6% of portfolio gross rental income is covered by green lease clauses.
100% of ELITE’s loans are sustainability-linked.
In the Singapore Governance and Transparency Index, ELITE jumped to 15th in 2024 from 40th in 2023.
Portfolio Metrics and Tenant Concentration
Portfolio occupancy: 93.5% as at end-1QFY25.
Primary tenant DWP accounts for 93.4% of gross rental income at end-FY24; Ministry of Defence adds 2.4%, HM Courts & Tribunal Services 1.4%.
Geographical spread: North West (23.7%), Scotland (16.7%), London (14.9%), South East UK (11.1%).
Balance Sheet Highlights
| Balance Sheet (£m) |
Dec-23A |
Dec-24A |
Dec-25F |
Dec-26F |
Dec-27F |
| Total Investments |
413.7 |
412.8 |
417.8 |
422.8 |
422.8 |
| Total Non-current Assets |
414.2 |
414.4 |
419.4 |
424.4 |
424.4 |
| Total Cash and Equivalents |
20.8 |
6.6 |
6.7 |
1.5 |
1.1 |
| Total Current Assets |
29.8 |
25.9 |
20.9 |
15.6 |
15.2 |
| Total Current Liabilities |
141.6 |
14.6 |
16.4 |
18.3 |
20.3 |
| Long-term Borrowings |
94.0 |
183.3 |
183.3 |
183.3 |
183.3 |
| Total Non-current Liabilities |
95.2 |
184.5 |
184.5 |
184.5 |
184.5 |
| Total Equity |
207.2 |
241.2 |
239.3 |
237.2 |
234.7 |
Key Ratios and Cash Flow
Net Property Income margin remains high at over 92%.
Gross interest cover trends down but remains above 2x.
Current ratio improves to 1.77 in 2024 before declining in the forecast period.
Free cash flow to firm is positive from 2024 onwards.
Net dividend payout ratio rises above 100% from 2025.
Conclusion: Why Elite UK REIT Remains Attractive
Elite UK REIT’s targeted acquisitions and robust capital management continue to support its high yield, stable income, and growing ESG credentials. With a strong focus on government-backed tenants, prudent debt and equity management, and a clear sustainability trajectory, ELITE is well positioned for resilient returns. While tenant concentration remains a key risk, the ongoing diversification efforts and capital recycling potential present further upside for investors seeking yield and stability in the UK real estate sector.
Stock Rating and Analyst Coverage
Rating: ADD (Total return outlook >10% in 12 months)
Target Price: £0.35 (current price: £0.335)
Analyst(s): Lock Mun Yee, Li Jialin
Consensus: 6 Buys, 0 Holds, 0 Sells
Elite UK REIT stands out as a yield-centric, government-anchored REIT, with sustainable growth prospects and a transparent, disciplined approach to portfolio and capital management.
