CGS International has reaffirmed its ‘buy’ rating for Elite UK REIT, following a series of site visits to the company’s properties in Scotland. The visits, which included locations in Edinburgh, Falkirk, Dundee, and Glasgow, highlighted the stability of income streams from government tenants, reinforcing the REIT’s defensive cashflow strategy. As of the first quarter of 2025, these Scottish assets represent 16.7% of Elite’s portfolio assets under management and contribute 10.1% to its total gross rental income.
The report from CGS International underscores Elite’s strategic advantage in repositioning assets into growth sectors like purpose-built student accommodation (PBSA). A notable example is the planned conversion of Lindsay House in Dundee into a 168-bed student accommodation, leveraging its proximity to local universities. This move is expected to enhance Elite’s portfolio value and address the growing demand for student housing.
CGS International has increased its distribution per unit (DPU) forecasts for Elite from 2025 to 2027 by 1.26% to 3.07%, reflecting a robust first half of 2025 and contributions from recent property acquisitions. The target price has been raised to £0.38, supported by the REIT’s stable earnings and the potential for net asset value (NAV) uplift through property repurposing.
With the interest rate cycle peaking, CGS International anticipates Elite’s book NAV to remain resilient, offering further value through strategic asset management. The REIT’s FY25 dividend yield is projected at 8.6%, translating to a total return of approximately 19%. Potential catalysts for re-rating include NAV boosts from valuation uplifts and increased dividend payouts, although tenant concentration remains a risk factor.
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