UOB Kay Hian Private Limited
Date of Report: Friday, 19 September 2025
Elite UK REIT: Accelerating Growth with Student Housing and Government Assets

Overview: Elite UK REIT’s Strategic Expansion in the UK Social Infrastructure Market

Elite UK REIT (ELITE SP), the first UK-focused Singapore-listed REIT, is rapidly diversifying its asset base to build a second pillar of growth via Purpose-Built Student Accommodation (PBSA) and high-yield government-leased properties. The REIT’s latest moves signal deepening resilience amid market uncertainties and a drive towards sustainable, counter-cyclical income streams.

PBSA: Building the Next Growth Pillar

Major Student Housing Project in Dundee

ELITE UK REIT has received planning approval to convert Lindsay House, Dundee, into a 168-bed PBSA facility.
The redevelopment, managed by Mys Asset Management, is scheduled for completion ahead of the academic year starting September 2027.
Dundee faces a significant student housing shortfall, with a student-to-bed ratio of 3.5x.
The site is strategically located within walking distance of Abertay University and University of Dundee.
Projected gross development value is £24 million, with an estimated ROI of 18% and yield on cost exceeding 7%.
Repurposing existing structures allows for reduced project costs and faster market entry.

PBSA Portfolio Roadmap

– ELITE plans to redevelop Cambria House in Cardiff, Wales, into a PBSA facility, potentially adding 300 beds near Cardiff University. – Management is also exploring conversion of other assets into PBSAs, indicating a scalable pipeline.

Strategic Data Centre Development at Peel Park

ELITE has submitted plans for an 80MW state-of-the-art data centre at Peel Park, Blackpool.
The site is strategically positioned near transatlantic subsea cables connecting the UK with North America and Europe.
Management is open to partnering with major data centre operators or divesting the site with approved development plans.
Unitholders may be rewarded with special dividends upon successful divestment.

Accretive Government-Leased Property Acquisitions

Priory Court, Customs House, and Ty Merlin

Completed acquisition of three government-leased assets for £9.2 million on June 20, 2025.
Properties leased to the Home Office and DEFRA, with a weighted average lease expiry (WALE) of 7.4 years.
Gross rental yield of 9.2%, surpassing ELITE’s existing portfolio.
Acquisition was priced at a 7.6% discount to independent valuations.
Expected to be DPU accretive by 0.6%, bolstering income stability and counter-cyclical resilience.

Engagement with Department for Work and Pensions (DWP)

ELITE is actively negotiating with DWP to extend leases expiring in 2028, aiming to lengthen the current WALE of 2.9 years.
Longer lease terms would further enhance income visibility and minimize lease rollover risk.

Financial Highlights and Key Metrics

Balance Sheet and Cash Flow Analysis

Debt Structure and Interest Rate Protection

Aggregate leverage declined by 1.8 percentage points to 40.7% as of June 2025.
Borrowing costs fell marginally to 4.8%.
91% of interest rates are fixed or hedged, providing strong protection against interest rate volatility.
All loans are sustainability-linked, with interest margin step-downs upon meeting energy efficiency targets.
No refinancing required until 2029, with two-year extension options on debt facilities.
All debt is GBP-denominated, offering a natural currency hedge.

Ownership and Sponsorship Changes

Sunway RE Capital sold its 15% stake in the REIT Manager to Elite Partners Holdings in August 2025.
Sunway RE Capital retains an 11.6% direct stake in ELITE but is no longer a sponsor.
The REIT Manager is now owned by Elite Partners (83%) and Jin Leng Investments (17%).
Elite Partners and Ho Lee Group remain as sponsors.

Portfolio Highlights: Geographic and Tenant Diversification

Over 99% of rental income is backed by the UK government, providing unmatched stability.

Shareholder Structure and Market Data

Shares issued: 603.2 million
Market cap: £211.1 million (US$155 million)
FY25 NAV/Share: £0.41
FY25 Net Debt/Share: £0.29
52-week high/low: £0.36/£0.265
YTD share price performance: +18.6%

Valuation and Analyst Recommendation

Target Price: £0.39 (based on DDM; COE: 9.0%, terminal growth: 1.5%)
Current Price: £0.35
Implied Upside: +11.4%
Rating: BUY

Recent Operational Highlights and Catalysts

1H25 DPU grew 10% year-on-year to 1.54 pence, driven by a higher payout ratio (95%) and £1.6 million dilapidation income.
Achieved positive rental reversion: Dallas Court (Salford) +30%, Ladywell House (Edinburgh) medical centre tenant +24% in 1Q25.
Strong, resilient cash flows underpinned by government leases and prudent financial management.
Raised 2026 DPU forecast by 1.7% on the back of recent acquisitions and lower cost of debt.
Key catalysts: recession-resistant yield, accretive UK government office and PBSA acquisitions, and potential special dividends from strategic asset monetisation.

Risk Management and Sustainability Focus

91% of interest rates fixed or hedged.
Sustainability-linked loans with incentives for energy efficiency.
No refinancing risk until 2029.
Aggregate leverage at a comfortable 40.7%.

Conclusion: Elite UK REIT Positioned for Sustainable, Counter-Cyclical Growth

Elite UK REIT’s strategic expansion into PBSA and its accretive acquisition of government-leased assets signal robust future-proofing and diversification. With government-backed rental income, a scalable PBSA development pipeline, strong financial management, and sustainability-driven debt structure, ELITE presents as a recession-resistant, counter-cyclical yield play well-suited for investors seeking both stability and growth in uncertain times.
Broker Coverage:
UOB Kay Hian Private Limited
Date: Friday, 19 September 2025