Singapore-listed Elite Commercial REIT is buying a £212.5m (€235m) portfolio of UK commercial properties from its associated companies.
UK-focused Elite Commercial REIT plans to issue new units, amounting to £89.4m, to vendor Elite UK Commercial Fund 2 to part-finance the proposed acquisition.
As the largest investor in Elite Commercial Fund 2, Partners RE will become a substantial unit-holder, with around 21% of Elite Commercial Fund, following completion of the transaction.
Shaldine Wang, chief executive of the manager, Elite Commercial REIT Management, said that, notwithstanding global economic headwinds, the acquisition was expected to provide stable cash flows and attractive recession-proof yield.
She said it would maintain the enlarged REIT’s exposure to high credit quality UK sovereign tenants, including the counter-cyclical Department of Works and Pensions, which occupies 82% of lettable space in the soon-to-be-acquired portfolio. Other tenants include government agencies and British courts.
The acquisition would lift the company’s total exposure to the London market to 14%.
More than 1.3m sqft of the portfolio is located in London and other large UK cities, including Manchester, Edinburgh, Liverpool and Cardiff.
The acquisition is the first for Elite Commercial REIT since it was listed on the Singapore Stock Exchange in February this year. Upon settlement, the vehicle’s valuation would increase from £319.1m to £531.6m.
Wang told IPE Real Assets: “On completion of the proposed acquisition, Elite Commercial REIT will still hold a right of first refusal over the four remaining assets held by Elite UK Commercial Fund 2 and all the assets held by Elite UK Commercial Fund 3.”
In September, Elite Commercial Fund 3, acquired four assets for £70m.
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