UOB Kay Hian analyst Jonathan Koh maintained a Buy rating on Elite Commercial REIT (MXNU – Research Report) today and set a price target of £0.35.
Jonathan Koh has given his Buy rating due to a combination of factors that highlight the resilience and growth potential of Elite Commercial REIT. The REIT’s distribution per unit (DPU) increased by 9.6% year-over-year in the first quarter of 2025, driven by a dilapidation settlement and lease surrender premium totaling £1.6 million, alongside a reduction in tax expenses by 13.6%. This growth in DPU aligns with expectations and demonstrates the REIT’s ability to generate stable cash flows even in challenging economic conditions.
Additionally, Elite Commercial REIT’s portfolio occupancy improved significantly, reaching 93.5% in the first quarter of 2025, with further improvements anticipated following planned divestments. The REIT also benefits from positive rental reversions, with notable increases in rental income from properties such as Dallas Court in Salford and Ladywell House in Edinburgh. Furthermore, the REIT’s debt is entirely composed of sustainability-linked loans, resulting in lower borrowing costs due to improved energy performance of its assets. These factors collectively underscore the REIT’s strong financial health and strategic positioning, justifying the Buy rating.