The manager of Elite Commercial REIT announced that its primary tenant – the UK’s Department of Work and Pensions (DWP) – will be expanding its team in light of recent developments in UK.
DWP is actively hiring more staff to work in the REIT’s portfolio, as part of its drive to double the number of Work Coaches countrywide to 27,000. This is due to increased services being provided from the properties by the UK Government to support the economy in times of economic need.
As the DWP increases the number of work coaches employed, there is also an increased need for floor space, for the work to be carried out. The existing space occupied by the DWP will not be sufficient for the higher number of job training and coaching sessions that are to be conducted.
This increased utilisation has been demonstrated through the waivers or extension of break options for two properties within the REIT’s portfolio – Lodge House, Bristol and John Street, Sunderland.
The manager is providing this as a response to the recent news reports of a decrease in demand for CBD office space as employees are required or wish to work from home, due to the Covid-19 pandemic.
In lieu of that, the manager is assuring investors that its portfolio of properties is facing an increase in demand for its office space, which is a counter-cyclical trend to the rest of the market.
Separately, the manager does not expect a significant business disruption at the properties in the REIT’s portfolio even as the UK Government imposes new restrictions to curb Covid-19, as during the previous lockdown the REIT’s Jobcentre Plus locations had remained open.
Shaldine Wang, Chief Executive Officer of the manager said, “The REIT’s primary tenant DWP plays a crucial role in the social infrastructure serving the UK’s local communities. The utilisation of the REIT’s assets, JobCentre Plus’ footfall and DWP benefit spending are all inversely correlated to the UK economy and employment rates. As such, despite the macroeconomic uncertainty and dynamic environment resulting from Covid-19, we remain positive about Elite Commercial REIT’s current focus on commercial assets with the ability to generate cashflow backed by UK sovereign credit2 .”
“We are confident of the continued demand for the REIT’s assets and its ability to provide attractive and recession-proof cashflows and ultimately continue to deliver stable and growing returns to our unitholders.”
Meanwhile, the REIT's sponsor – Elite Partners Capital – has also announced that it has acquired four commercial properties in UK for approximately £70.0 million ($112 million).
The properties were acquired in its UK Commercial Fund III, which targets to have assets under management (AUM) of up to £200 million, and is set to increase should the opportunity arise.
Elite Partners’ UK Commercial Fund III builds on the investment strategy as its predecessors. The focus on assets that provide stable cashflow backed by AA-rated sovereign covenant of the UK Government, which has pledged to provide significant economic resources and manpower to support the UK economy during and in the aftermath of Covid-19.
Elite Partners said 150 Broomielaw in Glasgow is the largest among the four latest acquisitions. It was acquired from Israeli insurance company CLAL, in one of the biggest UK office deals outside of London since the onset of the Covid-19 pandemic. The eight-storey building in Glasgow, Scotland’s largest city economy, offers 96,759 sq ft of Grade A office that is entirely let to Scottish Enterprise and is occupied by Scottish Ministers.
Victor Song, CEO of Elite Partners, said “Against the backdrop first of Brexit and more recently, Covid-19, we remain committed to the UK commercial property market, which continues to offer interesting acquisition opportunities. These assets acquired by the Fund are all leased to entities of the UK Government and hence offer stability in rentals as well as long lease periods. We now have an impressive portfolio that provides a long-term income stream that will translate into resilient returns for investors.”
As at 11.15am, units in Elite Commercial REIT are trading at 62 pence.
