Elite UK REIT (MXNU) Q2 2024 earnings summary

Executive summary

• Reduced borrowings by over £38m via fundraising and capital recycling; all refinancing completed, with no requirements until 2027.

• Portfolio valuation increased 0.6% to £415m as of 30 June 2024, driven by positive leasing and asset management.

• Distributable income stabilized through rental escalations and cost savings from lower debt; 1H 2024 DPU was 1.40 pence, with annualised yield of 11.7% at a £0.24 unit price.

• Occupancy stable at 92.3% with WALE of 3.8 years; 100% of rent collected in advance for the next quarter.

• Expanded investment strategy to include the Living Sector alongside social infrastructure.

Financial highlights

• 1H 2024 revenue was £18.6m, down 0.6% year-over-year due to vacant assets.

• Net property income fell 4.7% year-over-year to £18.7m, mainly due to higher vacancy holding costs.

• Distributable income for 1H 2024 was £9.2m; DPU at 1.40 pence, down 19.5% year-over-year (adjusted DPU down 2.1%).

• Net asset value per unit at £0.41 as of 30 June 2024; price-to-book ratio 0.6x.

• Total occupancy rate at 92.3%; rental collection from UK Government at 100%.

Outlook and guidance

• Portfolio to broaden into defensive sectors such as student housing and Build-to-Rent residential.

• UK real estate expected to remain attractive, especially for the living sector; assets well-located for future growth.

• Management targets sub-40% long-term gearing and continued proactive asset management.

• Manager expects continued stable income, supported by government-backed leases and advance rent collection.

• Early lease renewal dialogues underway to extend beyond 2028 expiries.