Elite Commercial REIT said Monday it entered agreements with its tenant, The Secretary of State for
Levelling Up, Housing and Communities of the United Kingdom, for asset enhancement works to meet sustainability and climate adaptation requirements.
The properties are occupied by the Department for Work and Pensions (DWP), which is the U.K.’s largest public service department, Elite Commercial REIT said in a filing to SGX.
Under the deals, the REIT will invest GBP12.5 million over three years toward asset enhancement works to improve sustainability and energy efficiency of DWP-occupied properties, the filing said. The funding will be via internal funding sources, such as existing and new debt and cash retained from the dividend reinvestment plan, the REIT said.
The works include repair, replacement or upgrade of lighting systems, heating and cooling systems, insulation and solar panels, and other measures to improve the energy performance certificate rates of the properties, the REIT said.
The agreements are in line with the U.K. government’s target of net zero carbon emissions by 2050, the filing said.
Shaldine Wang, CEO of the REIT’s manager, said the public-private collaboration was the result of regular engagement with DWP.
“Investing in retrofitting works to enhance the energy efficiency ratings of assets in the portfolio will contribute towards reducing their environmental impact. This win-win initiative demonstrates our commitment to adapt our portfolio to address sustainability and climate change requirements, and to extend the relevance of our assets to tenants,” she said in the statement.
Separately, DWP and Elite Commercial REIT agreed to re-negotiate the lease terms during the lease tenure for a significant number of leases by removing break options for 2023, with around 78.6 percent of the leases by total portfolio gross rental income now to continue to 2028 without break options, the filing said.
Elite Commercial REIT’s portfolio has 155 commercial buildings in the U.K., with more than 99 percent of the gross rental income derived from the U.K. government. The portfolio is mainly occupied by the DWP.