Elite Commercial REIT extends lease of 8 assets in the UK

The eight properties are owned by the Department for Work and Pensions.

Elite Commercial REIT has removed the lease break clause of eight assets occupied by the Department for Work and Pensions (DWP) through separate agreements with The Secretary of State for Levelling Up, Housing and Communities of the UK.

This brought the total of DWP assets with a March 2023 lease break clause removed to 108, or 83.2% of the portfolio by gross rental income with a stable lease profile until March 2028 without any lease break options.

Elite has 117 assets with a March 2023 lease break clause, and so far, the REIT’s manager, Elite Commercial REIT Management Pte. Ltd., only received a break option notice for one asset.

“The outcome further enhances the income visibility and lease stability of Elite Commercial REIT for the next six years,” the REIT’s manager, Elite Commercial REIT Management Pte. Ltd., said.

The terms of the leases of the eight assets remain intact except for the removal of the lease break clause, including the built-in inflation-linked rental escalation to start in April 2023.

“The rental uplift is based on the UK Consumer Price Index, subject to the annual minimum increase of 1% and a maximum of 5% on an annual compounding basis from 1 April 2018 to 31 March 2023,” the manager explained.

With the latest update, the weighted average lease expiry of the REIT’s portfolio is expected to remain stable at six years.

Meanwhile, the manager also agreed to increase the Sustainability Contribution by another $3.86m (£2.17m) towards agreed-upon asset enhancement works on DWP-occupied assets in Elite Commercial REIT’s portfolio over three years