2H25/FY25 Elite UK REIT's DPUs of 1.49/3.03 pence rose 1.4%/5.6% y-o-y, forming 49%/100% of our FY25e forecast. The increase was driven by interest savings from a lower cost of debt (FY24: 4.9% vs FY25: 4.7%) and contributions from the newly acquired assets, resulting in 7.4% y-o-y growth in distributable income in FY25 to £18.3mil.
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In addition, the Peel Park asset has received planning approval for data centre facility use, unlocking potentially significant divestment value.
The positives
Strong lease regearing outcome.
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DWP will have the option to renew the lease agreements for a further five years for new leases expiring from 2035, and for a further three years for new leases expiring before 2035. CPI-linked rent reviews will be conducted in 2033 for leases expiring in 2035 and 2038, with a compounded annual rent increase of between 1% and 5%.
Negotiations are ongoing for the remaining 2028 leases with DWP, and we expect total regearing to cover at least 75% of 2028 lease expiries.
Disciplined capital management with refinancing optionality.
Read more at SGinvestors.io.
Above is an excerpt from a report by Phillip Securities Research. Clients of Phillip Capital may be the first to access the full PDF report @ https://www.stocksbnb.com/.
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