SINGAPORE: Elite Commercial REIT Management , the manager of Elite Commercial REIT provided an update on its primary tenant, the United Kingdom (UK) Government’s Department Of Work And Pensions (DWP)’s operations and activities, in light of recent developments in the UK.
The 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. The REIT’s primary tenant, the 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.
There were 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.
Elite Commercial REIT 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 this week. During the previous lockdown in the UK, the REIT’s Jobcentre Plus locations had remained open to process and disburse benefits to claimants, even as medical assessments, interviews or other face-to-face appointments were discouraged.
Ms Shaldine Wang, Chief Executive Officer of the Elite Commercial REIT Management 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, Job Centre 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 credit.”
“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.”
The DWP is responsible for the UK’s welfare, employment, pensions and child maintenance policy, and currently serves over 20 million claimants.
Moving forward, the REIT Manager remains focused on strengthening the performance of the REIT’s portfolio. In line with the investment mandate for the REIT, the Manager will continue to closely monitor and assess the market, proactively looking at opportunities for growth via yield-accretive asset acquisitions to enhance returns to Unitholders and improve prospects for future income and capital growth.
In particular, the Manager has been granted a right of first refusal (ROFR) by one of its sponsors, Elite Partners Capital (EPC), to acquire properties it owns in the UK, most of which have been leased long-term by various ministries of the UK Government.EPC as a sponsor, is committed to the UK commercial property market, which provides a continuous ROFR pipeline to the REIT. The REIT can then explore these opportunities when capital support is available for such yield-accretive acquisitions.
