Should You Invest In Elite Commercial REIT [Fundamental Analysis]

In this article, we'll be conducting a fundamental analysis of Elite Commercial REIT and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having high capital preservation ability.

Information Is Accurate Up To Jan 2024

Business Description

Elite Commercial REIT is an Office REIT that was listed in 2020 and owns 155 office properties across the United Kingdom that are leased directly to the UK government.

What I Like About Elite Com REIT:

• Stable top-line performances
  

• More than 99% of gross rental income is derived from AA-Credit rated UK Government and rentals are collected three months in advance. This provides stability in distribution and an additional buffer in the event of major lease changes

What I Do Not Like About Elite Com REIT:

• REIT is relatively new and management is unproven.
  

• The gearing ratio is very high and financial health has been deteriorating. While the management has taken action to reduce their gearing via divestment, the current depressed environment would force the management to dispose of properties at a lower valuation thereby eroding their Ne