Great Western House, Birkenhead (Elite Commercial REIT)

Elite Commercial REIT has entered into a conditional share purchase agreement to acquire 58 commercial buildings across the UK.

It will be executed by acquiring the share capitals of two special purpose vehicles from Elite Bushel Holding Limited, a subsidiary of Elite UK Commercial Fund II - the REIT's sponsor.

The acquisition consideration is GBP212.5 million (USD275 million) on a willing-buyer and willing-seller basis, taking into account independent valuations from Colliers International and BNP Paribas Real Estate.

This marks the REIT’s first acquisition since its listing on Singapore Exchange (SGX) in February 2020.

Elite UK Commercial Fund II had, during the time of the initial public offering of Elite Commercial REIT, granted a right of refusal over the assets.

The properties feature total net internal area of 1,307,064 square feet, and are located in London, and across other major UK cities, including Manchester, Edinburgh, Liverpool and Cardiff.

Out of the 58 new properties, 54 are freehold while the remaining are on a long leasehold tenure ranging between 83 and 983 years.

The new properties’ portfolio provides a rental yield of 8.0% when the London properties are excluded.

82% of the new properties are occupied by the DWP, while 17% are occupied by other UK Government occupiers, including the UK Ministry of Defence, National Records of Scotland, Environmental Agency, HM Courts and Tribunals Service and Natural Resources Wales.

Following the proposed acquisition, Elite Commercial REIT will see a 66.6% increase in the REIT’s valuations, from GBP319.1 million to GBP531.6 million.

It will also result in a 59.1% increase in net property income.

The REIT’s manager intends to finance the acquisition by issuing consideration units to the vendor, conducting an equity fund-raising exercise, and taking on an external loan.

Elite Commercial REIT has been suspended from trading on the SGX, pending this announcement.

It was last done at GBP0.64, which implies a distribution yield of about 7.8% according to data compiled on the Singapore REITs table.

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By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.