Strategic Acquisition and Diversification Drive Buy Rating for Elite Commercial REIT

Analyst Lock Mun Yee of CGS-CIMB reiterated a Buy rating on Elite Commercial REIT (MXNU – Research Report), with a price target of £0.35.

Lock Mun Yee has given his Buy rating due to a combination of factors, primarily the strategic acquisition of three new UK properties by Elite Commercial REIT. This acquisition is set to increase the portfolio’s value by 2.2% and is expected to result in a 0.6% accretion to the proforma FY24 DPU. Additionally, the gearing ratio is projected to decrease slightly following a private placement, indicating a strengthening financial position.
Furthermore, the acquisition allows for diversification of tenant exposure, reducing reliance on the Department for Work and Pensions and introducing the Department for Environment, Food & Rural Affairs as a new tenant. The properties’ long lease expiry profile enhances income resilience, extending the weighted average lease expiry. The attractive FY25F dividend yield of 8.8% and a total return of 13.3% further support the Buy rating, alongside potential re-rating catalysts from capital recycling activities.

In another report released today, DBS also maintained a Buy rating on the stock with a £0.36 price target.

MXNU’s price has also changed moderately for the past six months – from p29.500 to p33.500, which is a 13.56% increase.