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Elite Group’s Distribution Per Unit Hits Forecast Despite COVID-19

Elite Group’s Distribution Per Unit Hits Forecast Despite COVID-19

May 11, 2020 — Elite Group’s distribution per unit (DPU) was recorded at 0.74 pence from its listing date of February 6 to end of March this year. The forecasted DPU was at 0.73 pence.

The 97 assets held by the Group are predominately leased to the Secretary of State for Housing, Communities and Local Government, with DWP as the primary occupier. DWP is a uniquely counter-cyclical occupier. 82.5% of the assets in the Initial Portfolio is used by the DWP to provide key front-of-house services, primarily Jobcentre Plus unemployment services. Claimant counts, job centre footfall and DWP benefit spending are all highly correlated to unemployment. An increase in unemployment has historically been linked to an increase in the number of UK benefits claimants requiring the services provided by the UK Government in the Group’s assets. Against the macroeconomic backdrop, our assets via DWP continue to be a crucial social infrastructure serving the UK society.

In late March 2020, the UK government announced a lockdown to prevent the spread of Covid-19. While the public is discouraged from visiting the Jobcentre Plus, they remain open to process and disburse benefits to claimants.

In terms of rent collection, the Group has received 3-months of advance rent for the period 1 April 2020 to 30 June 2020, with 92.8% received on or before the due date and 99.4% received within 7 days of the due date.

The Group expects to provide a stable income to its investors as over 99.0% of rental income is derived from full repairing and insuring (triple net) leases from the UK Government. Rated AA and Aa2 by S&P and Moody’s respectively, the UK Government has one of the lowest debt-to-GDP ratios amongst the G7 countries. On top of that, the Covid-19 situation does not trigger force majeure or termination clauses of the Group’s leases with the UK Government.

The Group remains well capitalised, with adequate working capital and debt headroom to meet its ongoing obligations.

The Manager will continue to monitor the COVID-19 situation and will announce any material developments regarding the Group’s operations in a timely manner.

Read more here..

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