Units in Elite Commercial REIT opened 10.7% lower at 26.8 British pence, down from its last close of 30 British pence on Dec 4. The drop comes after the REIT manager announced that its portfolio is now valued at GBP412.5 million ($697.2 million) as at Dec 1, 9.5% lower from the GBP464.5 million in valuation as at Dec 31, 2022.
The new valuation brings the REIT’s gearing ratio at 49.6%, close to the regulatory limit of 50% on a pro forma basis. That said, the REIT’s interest coverage ratio stands at a robust 3.3 times.
The REIT said that there is no near-term debt maturity until the end of 2024 and that it remains compliant with all of the financial covenants under its debt facilities. This means that distributions to its unitholders remain unaffected.
In its Dec 5 statement, the manager says it is focused on making strategic divestments to lower its gearing and to strengthen the REIT’s balance sheet. The proceeds from the asset divestments to-date were primarily utilised to pare down loans to lower gearing and reduce interest costs.
“The proactive move to update portfolio valuations provides clarity to the market on the intrinsic value of the portfolio, which highlights the attractive value of Elite Commercial REIT,” says Joshua Liaw, CEO of the manager. “This year to-date, we have tangible outcomes from our active asset management efforts – the manager finalised the disposal of five assets at a premium over aggregate value, secured a 13.1% inflation-linked rent escalation starting from April 1, as well as successfully concluded negotiations on dilapidation settlements for numerous assets.”
He adds: “The manager remains positive about the relevance of Elite Commercial REIT’s fit-for-purpose portfolio of assets in the UK, which is part of the critical public infrastructure serving the UK’s social services sector. We aim to continue actively enhancing and unlocking the portfolio’s value for our unitholders through proactive asset management strategies and continued tenant engagement.”
See also: Changes in ICR, leverage to come into effect immediately, with additional disclosures in March
As at Sept 30, the REIT’s portfolio occupancy rate was 92.1% with a weighted average lease expiry (WALE) of 4.3 years. About 94.8% of total portfolio rent is secured to March 2028.
As at 11.01am, units in Elite Commercial REIT are trading 3.5 British pence lower or 11.67% down at 26.5 cents.
