Elite UK REIT (MXNU) Q3 2024 earnings summary

Executive summary

• Portfolio valued at £415 million as of 30 June 2024, with 99.1% gross rental income from UK government tenants and a 93.9% occupancy rate.

• DPU increased 3.9% year-over-year to 2.13 pence for 9M 2024, driven by higher distributable income and tax savings.

• Revenue for 9M 2024 reached £28.0 million, with distributable income up 2.8% year-on-year to £14.0 million.

• Strategic divestments and asset repositioning initiatives are underway, including a potential data centre development in Blackpool.

• Asset management progress included lease renewals, divestment of Sidlaw House, and planning for a data centre at Peel Park.

Financial highlights

• 9M 2024 DPU of 2.13 pence (90% payout), up from 2.05 pence in 9M 2023.

• Portfolio occupancy increased to 93.9% after divestment of Sidlaw House.

• Distributable income rose 2.8% year-over-year to £14.0 million.

• Borrowing cost reduced to 5.0% after refinancing, down 20bp from 30 June 2024.

• Sidlaw House, Dundee divested at £1.3 million, 42% above valuation.

Outlook and guidance

• Focus on proactive asset management, opportunistic divestments, and capital recycling to lower gearing.

• No refinancing requirements until 2027, with 87% of interest rate exposures hedged.

• Expansion into living sector assets such as student housing and build-to-rent residential is planned.

• Manager expects to provide stable income, supported by hedging and advance rent collection.

• UK inflation forecast to average 2.5% in 2024, rising to 2.6% in 2025, with slower interest rate reductions.