Goldman Sachs – Elite Commercial Reit posts 2.49 pence H2 DPU with full occupancy as at Dec 31, Companies & Markets
Mon, Feb 01, 2021 – 10:17 AM
ELITE Commercial Reit posted its H2 distribution per unit (DPU) at 2.49 pence (4.5 Singapore cents) on Monday, 2.9 per cent higher than its initial public offering (IPO) forecast of 2.42 pence, with occupancy at 100 per cent as at Dec 31 last year despite the UK’s nationwide lockdown.
The Reit (real estate investment trust), listed on the Singapore Exchange in February 2020, reported a post-tax profit of £19.5 million for H2, which was almost treble its IPO forecast of £6.9 million. Revenue was half a per cent lower than expected at £11.6 million for the second half of 2020.
The manager attributed the higher post-tax profit to a net fair value gain of £12.3 million on investment properties.
For the period from Feb 6 to Dec 31, DPU was 4.44 pence, or 2.3 per cent higher than forecast while the profit after tax of £23.4 million was more than double the forecast. Revenue for the period stood at £21 million, 0.1 per cent lower than its forecast.
Following the announcement to acquire 58 UK commercial properties for £212.5 million in October last year, the group expects the acquisitions to be DPU accretive. This will expand its portfolio by 67 per cent at 155 properties, up from 97.
However, the manager foresees that unemployment will grow in 2021 once the furlough scheme ends in April.
According to the Office for Budget Responsibility’s estimates, unemployment will peak at about 7.5 per cent in the middle of 2021 – representing 2.6 million people out of work – up from about 4 per cent before the pandemic struck.
The UK’s gross domestic product is also expected to contract by 1.5 per cent in Q1 2021 according to a Goldman Sachs report.
However, the group is confident its income will remain stable in 2021 as more than 99 per cent of its revenue comes from office leasings by the UK government.
The Department of Work and Pensions (DWP), a primary occupant of the group’s office spaces, has promised to keep its Jobcentres open during the lockdown and increase the number of work coaches it employs to 27,000 by March 2021.
“Against the current macroeconomic backdrop, our assets via DWP continue to be a crucial social infrastructure that serves the UK society,” said the manager.
The Reit’s manager also added that they have received more than 99 per cent of the rental in advance for the period from January to March 2021.
“The group remains well capitalised, with adequate working capital and debt headroom to meet its ongoing obligations,” it said.
Units of Elite Commercial Reit were up 0.5 pence, or 0.8 per cent at 65 pence at 9.43am.