It is also expanding into student housing with the conversion of its Lindsay House property
[SINGAPORE] The manager of Elite UK Reit on Tuesday (Jun 16) said it is set to buy five freehold and virtual freehold government-leased properties across the UK for £31.9 million (S$55 million).
The real estate investment trust (Reit) is also embarking on a £19 million conversion of its Lindsay House property in Dundee, Scotland, into a purpose-built student accommodation facility.
The Reit manager said it expects the transaction to be 1.3 per cent accretive to its distribution per unit (DPU), raising its pro forma DPU as at Dec 31, 2025, from £0.03011 to £0.03051.
Joshua Liaw, CEO of the manager, noted that the pairing of government-leased properties and living sector assets will enhance the resilience of distributions amid continued macroeconomic volatility.
He said that the acquisition reinforces the portfolio with essential UK infrastructure assets underpinned by long-term, government-backed revenue, and that the student accommodation conversion aligns with the Reit’s commitment to deliver sustainable yields.
The acquisitions will bolster the Reit’s lease maturity profile, extending its portfolio weighted average lease expiry from 2.4 years at the end of 2025 to 7.6 years on a pro forma basis. With the addition of the new assets, the enlarged portfolio valuation will rise about 7 per cent to £492.1 million.
The targeted commercial assets are Queensway House in East Kilbride, Griffin House in Wigan, Penhaligon House in St Austell, Challand House in Pontefract and Bridgend Jobcentre in Wales. Combined, the properties will contribute about £2.6 million in annual gross rental income, said the Reit’s manager.
All five of the new properties are leased entirely to the UK government under full repairing and insuring triple-net leases, providing a counter-cyclical revenue stream backed by sovereign credit.
This transaction diversifies the Reit’s occupier base by introducing a new key government tenant – the UK tax authority, His Majesty’s Revenue and Customs (HMRC). HMRC occupies Queensway House, which will account for roughly 3.1 per cent of the Reit’s gross rental income.
The remaining four properties are occupied by the UK Department for Work and Pensions (DWP). Consequently, the income contribution from non-DWP government occupiers will rise by 2.6 percentage points to 9.5 per cent on a pro forma basis.
To finance the acquisitions and conversion, the Reit’s manager said it plans to use an optimised funding mix. This includes up to £30.7 million in external bank borrowings, a private placement intended to raise £7.4 million and £5.9 million in internal cash resources.
It also plans to raise about £8.9 million by issuing consideration units to Elite UK Commercial Fund III, a vehicle managed by a subsidiary of the Reit’s sponsor, Elite Partners.
The strategic repositioning of Lindsay House marks the Reit’s first entry into the UK living sector. The five-storey former office building will be transformed into a 170-bed student accommodation asset with communal amenities such as a gym and study areas.
The property is located in a high-density student area near Abertay University and the University of Dundee, with completion targeted ahead of the 2027 academic year.
Units of the Reit ended Monday flat at £0.34.
