Elite Commercial UK REIT has released its results and it is a positive one. Market responded with a 8% jump in share price
Summary
- Upside surprise with dividend of 1.40 DPU for 1st Half, translating to 10.5% dividend
- Total Occupancy Increase
- Deleveraging Exercise has reduced leverage ratio to below 45%
Elite's REIT tenant is largely the UK's Department for Pension and Work so the rental collections have been prompt. There is no news of the UK government vacating any of its leases.
Borrowing cost has stayed the same at 5.2% interest, indicating that interest cost has peaked.
Future Dividend
With annual rentals increase tied to UK inflation rate, Elite REIT should start to report higher revenue/NPI especially with UK interest rates falling too. The REIT is already declaring dividends at 90%; hence the payout ratio is unlikely to be reduced and dividends will start growing
All in, this is a decent REIT to own.
As per my view, overseas REITs are giving superb returns in comparison to local ones, and for a few REITs like Elite they have a safe leverage ratio and strong tenants. Many foreign REITs are better than Singapore stocks and I will recommend investors to start investing overseas with our strong currency.
Close to double digit dividends are aplenty outside of Singapore.
<Not vested in Elite UK>
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