Elite UK REIT - Solid DPU growth amidst asset repositioning

Higher DPU in 1Q 2025

Elite UK REIT reported a 1Q 2025 distribution per unit (DPU) of 0.76 pence, representing a 9.6% year-on-year increase. Revenue rose 0.6% year-on-year, while net property income (NPI) grew 24.4%. 

Adjusted NPI, excluding one-off lease surrender premiums and dilapidation settlements, increased 4.9% year-on-year.

Positive Rent Reversion Supports Income

Revenue growth was underpinned by strong rent reversions, including a 30% uplift at the Salford property and a 24% increase from a medical centre tenant at Ladywell House. 

Additionally, the REIT benefited from a full-quarter contribution of reversionary rent at Dallas Court. 

Portfolio occupancy rate was at 93.5% in 1Q 2025, dipping slightly from 93.9% in 4Q 2024. The DPU growth was further supported by lower interest costs during the quarter.

Asset Repositioning in Progress 

Elite UK REIT continues to reposition its portfolio for long-term growth. A planning application has been submitted to convert Lindsay House, a former government office in Dundee’s CBD, into a 168-bed purpose-built student accommodation (PBSA) facility. 

Located within a 3–7-minute walk to the University of Dundee and Abertay University, the site addresses a significant PBSA shortage in the city. 

Dundee currently has only 4,000 PBSA beds, against a 2.5x student-to-bed ratio and a 3% average student population growth.

Data Centre Development Opportunity

A separate planning application has been submitted for a data centre development in Blackpool, UK. 

The site is positioned to benefit from low-latency subsea cable connections linking Blackpool to Dublin, Europe, and North America. 

A 120 MVA power supply has already been secured, positioning the site for hyperscale and AI-enabled data centre usage.

Improved Debt Profile and Interest Costs

As of 31 March 2025, 88% of the REIT’s borrowings are fixed or hedged, with a weighted average interest rate of 4.8%, down from 4.9% in the prior quarter. 

Aggregate leverage improved slightly to 42.2% as at 31 March 2025 from 42.5% as at 31 December 2024. 

All borrowings are denominated in GBP, offering a natural hedge against currency risk. Elite UK REIT has no further refinancing requirements until 2027.

Maintain Buy

Elite UK REIT is trading at an annualised distribution yield of 9.9% based on 1Q FY25 distributions. 

At its latest reported net asset value of £0.40, the REIT is trading at a price-to-book ratio of 0.75x, offering deep value relative to peers.

Related links:

• Elite UK REIT share price and share price target
• Elite UK REIT dividend history and forecast

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