“Over the past three years of headwinds on multiple fronts resulting in declining DPU, we maintained a neutral stance on Elite. We now turn positive on the REIT as distributable income has stabilised and is operationally driven and sustainable, boosted by interest savings,” the analysts write in their Feb 12 report.
DBS Group Research analysts Tabitha Foo, Derek Tan and Dale Lai have upgraded their call on Elite UK REIT to “buy” from “hold” as they see the REIT’s distribution per unit (DPU) back on a growth trajectory. The analysts have also given the REIT a higher target price of 36 British pence (61 cents) from 25 British pence previously.
The REIT’s results for the FY2024 ended Dec 31, 2024, exceeded their expectations with full-year distributable income up by 2.3% y-o-y to GBP18.5 million. The higher distributable income was due to savings in property holding costs from the divestment of vacant assets, lower interest costs and tax savings. Meanwhile, Elite UK REIT’s FY2024 DPU fell by 6.5% y-o-y to 2.87 pence on an enlarged unit base, although DPU would have been 5% higher y-o-y after adjusting based on FY2024’s weighted average units in issue. The team had predicted Elite UK REIT’s FY2024 DPU to come in at 2.76 pence.
