Elite UK REIT's 1Q26 revenue/adj. NPI rose 1.2%/4.0% respectively to £9.4mil and £9.1mil, forming 25%/27% of our FY26e forecast.
Distributable income increased 9.8% y-o-y to £5.3mil. The increase was driven by positive rental reversions, contributions from 3 acquisitions (Priory Court, Custom House, Merlin House) in FY25, and falling financing costs through debt repayment.
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Borrowing cost is stable at 4.7%, with 92% of debt at fixed rate (85% fixed as of Dec25). Interest coverage ratio is stable q-o-q at 2.6x.
Portfolio valuation has risen 9.1% from Dec25. NAV upside is expected from an accretive divestment of Peel Park (~ 10% of total portfolio value).
The positives
Strong capital management.
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Interest coverage ratio is at 2.6x, supported by government tenants typically paying rents three months in advance, with proceeds used to repay debt.
With the 70% DWP lease regear extending WALE to 7.2 years, we believe Elite is well positioned to negotiate better lending terms ahead of its Oct27 debt maturity (£174.9mil in drawn debt). Management has the flexibility to extend one debt tranche and refinance another to stagger debt maturities.
Portfolio valuation increased.
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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/.
