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Elite Commercial Reit lodges preliminary prospectus

ELITE Commercial Reit Management has lodged a preliminary prospectus to list a UK-focused Singapore Reit (real estate investment trust) on the Singapore Exchange mainboard.

Elite Commercial Reit has an initial portfolio of 97 properties - all but one are freehold - across the UK and is set to be the first Reit denominated in British pound to be listed in Singapore.

According to the manager, as 99 per cent of gross rental income stems from leases with the UK government, primarily DWP which is the largest public service department, the Reit's portfolio provides "stable, recession-proof and Brexit-proof cash flows".

With a total net internal area of around 2.6 million square feet spanning a site area of some 47 hectares, the initial portfolio has an aggregate indicative appraised value of 319.1 million pounds (S$560 million) as at end-August 2019, according to the document.

The Reit's manager said the IPO portfolio provides a net property income yield of 7.1 per cent based on the forecast for 2020 - an attractive yield spread to UK Government 10-year bonds despite being backed by the same sovereign credit.

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This yield, it said, was particularly attractive in the context of a low interest rate environment.

Projected distributable income for the Reit is at 16.2 million pounds in the year ending December 2020 and 16.6 million pounds in 2021. Net property income is forecast to be 22.7 million pounds in 2020 and 2021.

The Reit's total number of units in issue as at the date of the prospectus is 95 million units, which are currently held by private trust investors, of which the top three Ho Lee Group Trust, Sunway RE Capital and Kim Seng Holdings hold around 26 per cent, 21 per cent and nearly 16 per cent, respectively.

Separately, cornerstone investors - UBS AG's Singapore and Hong Kong branch, Bank of Singapore and CIMB Bank Berhad's Singapore branch - have agreed to subscribe for some 77.83 million units at the offer price on behalf of their private banking clients.

The Reit's sponsors are Singapore's Elite Partners Holdings and property and construction firm Ho Lee Group, as well as a wholly-owned unit of Malaysian conglomerate Sunway Group.

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