- FY25 Elite UK REIT's DPU rose 4.5% y-o-y, aided by lower financing costs and higher distribution payout ratio. Financing costs fell 20bps y-o-y to 4.7% and we expect another ~20bps savings this year.
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Elite UK REIT’s 2H/FY25 financials are in line.
- The key takeaway is the recent early renewal of a substantial portion of its UK government leases that are expiring in early 2028 – the majority of these have been extended to 2032 and beyond, lifting a key overhang. We expect this to have a positive effect on valuations and borrowing costs.
- A positive update on the Peel Park data centre (DC) development is likely in the near term.
- Elite UK REIT's share price is trading at a still-attractive 0.9x FY26F P/BV.
Positive uplift from early UK government lease re-gearing exercise.
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- We expect Elite UK REIT’s improved income visibility to also have a positive +3-7% impact on its valuation. The REIT manager continues to engage with DWP and expects the majority of the remaining 32% of leases – which are expiring in early 2028 – to be extended, with guidance of 10-15% of assets (by income) likely becoming vacant that could be repositioned or sold.
- As part of early renewals, Elite UK REIT will provide a one-time capital incentive of GBP 9.5m, with DWP to top up an additional ~GBP 13m.
Peel Park DC development plans are at the final approval stage.
- Read more at SGinvestors.io.
