Elite Commercial REIT - CGS-CIMB Research 2023-08-07: Improving Portfolio Resiliency

Elite Commercial REIT - Improving Portfolio Resiliency

Elite Commercial REIT (SGX:MXNU) | SGinvestors.ioElite Commercial REIT (SGX:MXNU)
  • Elite Commercial REIT (SGX:MXNU) posted a 3.4% y-o-y increase in 1H23 revenue to £19.1m, thanks to rental escalation of about 13.1% for 136 of its 155 assets, following an inflation-linked rental uplift effective Apr 2023, partly offset by income vacuum from 8 vacant assets.
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  • Income available for distribution fell 23.7% y-o-y to £9.3m as earnings were eroded by higher interest expense. Elite Commercial REIT's 1H23 DPU of 1.74 pence is 32% lower y-o-y, due to a lower payout ratio of 90%.

High occupancy; adopting portfolio value maximising strategy

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  • With the dilapidation settlement completed for 4 of its properties, Elite Commercial REIT has proposed to divest John St, Sunderland, and Openshaw Jobcentre, Manchester, for £1.1m, or at a 14.4% premium to its last valuation. Elite Commercial REIT indicated that another 3 vacant properties are in advanced divestment negotiation stages, and the aggregate value is expected to be above its book value.
  • In terms of dilapidation settlements, it has agreed on settlements for another 4 properties and has a further 4 assets under negotiation. Elite Commercial REIT indicated that these properties will undergo various asset enhancement initiatives, including being evaluated for potential divestments or redevelopments.
  • We believe these initiatives would enable Elite Commercial REIT to reduce holding costs of the vacated properties or pare down debt to lower its gearing and strengthen balance sheet in the near term.

Managing gearing through strategic capital recycling

  • Read more at SGinvestors.io.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.

LOCK Mun Yee CGS-CIMB Research | Natalie ONG CGS-CIMB Research | https://www.cgs-cimb.com 2023-08-07

Read also CGS-CIMB's most recent report:
2024-02-19 Elite Commercial REIT - Execution On Track.

Previous report by CGS-CIMB:
2023-11-07 Elite Commercial REIT - Focusing On Building Balance Sheet Strength.

Price targets by other brokers at Elite Commercial REIT Target Prices.

Listing of research reports at Elite Commercial REIT Analyst Reports.

Relevant links:
Elite Commercial REIT Share Price History,
Elite Commercial REIT Announcements,
Elite Commercial REIT Dividends & Corporate Actions,
Elite Commercial REIT News Articles


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