Elite Commercial REIT - Phillip Securities 2024-05-06: Valuation Upside From Redevelopment

• Elite Commercial REIT (SGX:MXNU)'s gross revenue for 1Q24 increased by 0.8% y-o-y to £9.2mil thanks to the rental escalation that kicked in Mar 23, forming 24% of our FY24e estimates. NPI slid 3.7% y-o-y to £8.3mil, within our estimates.
• - Read this at SGinvestors.io -
• Elite Commercial REIT has expanded its investment mandate to include the Living Sector. Two vacant assets are on track to be redeveloped into student accommodation and a data center, which will unlock their value by uplifting rental and valuation by ~30 -40%.
• - Read this at SGinvestors.io -

The Positives

Expanded investment mandate.

• Elite Commercial REIT is expanding its investment mandate into the living sector, such as Student Housing, Senior Living, or data centers, to ride on influx of international students and AI demand respectively.
• Lindsay House is slated to be converted into a 40-200 bed student housing facility upon approval from authorities. Typical values are around £130k per bed with yields of 5.5%. The annual income for the building would soar by 280% to ~£1.4mil from £360k in FY22, and the valuation will double to £38mil upon successful redevelopment.
• With the power shortage in the UK, data centers will provide a growth engine for the booming AI demand. Elite Commercial REIT is actively working on securing sufficient power to meet tenants' requirements, and we expect the process to take roughly 1.5 years to complete construction.

The Negative

Further downtime for the vacant assets.

• Read more at SGinvestors.io.

Liu Miao Miao Phillip Securities Research | https://www.stocksbnb.com/ 2024-05-06 SGinvestors.io

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