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Thursday, May 13, 2021

Elite Commercial REIT Review @ 13 May 2021

Basic Profile & Key Statistics

Elite Commercial REIT (Elite) is an office REIT that owns 155 properties in U.K.

Performance Highlight

Gross revenue, distributable income and DPU are more than forecast by 15.5%, 11.1% and 1.8% respectively due to the contribution from 58 newly acquired properties on 9 March 2021.
Acquisition for 58 properties was completed on 9 March 2021. This acquisition would further improve the performance and fundamentals of ELITE.

Related Parties Shareholding

  • REIT sponsor's shareholding is low at 6.4%
  • REIT manager's shareholding is slightly high at 1.24%
  • Directors of REIT manager's shareholding is high at 10.43%

Lease Profile

  • Occupancy is high at 100%
  • WALE is long at 7.4 years
  • Highest lease expiry within 5 years is low at 1.2% which falls in 2022
  • Almost all properties are freehold or longer than 99 years remaining land tenure.

Debt Profile

  • Gearing ratio is high at 42.1%
  • Cost of debt is low at 1.9%
  • Fixed rate debt % is low at 63%
  • All debts are secured debts
  • WADM is slightly short at 2.8 years
  • Highest debt maturity within 5 years is high at 54.8% which falls in 2024
  • Interest coverage ratio is high at 7.4 times

Diversification Profile

  • Top geographical contribution is low at 13.3%
  • Top property contribution is low at 9.3%
  • Top 5 properties contribution is low at 26.2%
  • Top tenant contribution is high at 97.2% 
  • Top 10 tenants contribution is high at 100% 

Key Financial Metrics

  • Property yield is high at 6.8% 
  • Management fees over distribution is low at 10% in which unitholders receive £ 10 for every dollar paid 
  • Distribution on capital is high at 4.9%
  • Distribution margin is high at 70.3%

Trends

  • Slight Uptrend - NAV per Unit, Interest Coverage Ratio
  • Flat - DPU, Distribution Margin
  • Downtrend - Property Yield, Distribution on Capital
The sharp decrease in property yield and distribution on capital is because the newly acquired properties only contribute less than a month after acquisition.

Relative Valuation

  • Dividend Yield - Latest 4 quarters DPU @ 4.92 pence / average yield @ 7.4% = £ 0.665
  • Price/NAV - NAV @ £  0.61 x average P/NAV @ 1.08= £  0.66


Author's Opinion

 Favorable Less Favorable
High Directors of REIT Manager's ShareholdingLow Sponsor's Shareholding
High OccupancyHigh Gearing Ratio
Long WALELow Fixed Rate Debt %
No Major Lease Expiry within 5 Years0% Unsecured Debt
Almost 100% Freehold PropertiesConcentrated Debt Maturity
Low Cost of DebtHigh Top Tenant & Top 10 Tenants Contributions
High Interest Coverage Ratio 
Low Top Geographical Contribution 
Low Top Property & Top 5 Properties Contributions 
High Property Yield 
Competitive Management Fees 
High Distribution on Capital 
High Distribution Margin

From the above, Elite fundamentals and performance are resilient. Those newly acquired 58 properties would provide full quarter contribution which should further improve Elite performance moving forward. 


For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT-TIREMENT Patreon - Support as a Patron and get SREITs Dashboard PDF or Data Excel

REIT-TIREMENT Facebook Page - Support by liking my Facebook Page

REIT Investing Community - Facebook Group where members share and discuss REIT topic


*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

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