Elite Commercial REIT said Friday it has entered agreements to remove the lease break clause from eight assets in its portfolio which have a lease break option in March 2023.
The agreements were with The Secretary of State for Levelling Up, Housing and Communities of the United Kingdom, the REIT said in a filing to SGX.
The fresh deals brought the total to 108 out of 117 assets occupied by the Department for Work and
Pensions (DWP) which have had the March 2023 lease break clause removed — or 83.2 percent of the portfolio by gross rental income having no lease break options until March 2028, the REIT said.
“The outcome further enhances the income visibility and lease stability of Elite Commercial REIT for the next six years,” the REIT said.
Other lease terms are intact, including the built-in inflation-linked rental escalation set to begin in April 2023, with a minimum annual increase of 1 percent and a maximum of 5 percent, the REIT said.
In addition, the REIT’s manager has agreed to increase its sustainability contribution by another GBP2.17 million on asset enhancement works on DWP-occupied assets over three years, the filing said. The aggregate sustainability contribution will be GBP14.67 million, the REIT said.
The REIT said: “This sustainability collaboration is part of the manager’s proactive strategy to ensure that the properties remain relevant and to enhance the long-term value of Elite Commercial REIT by integrating sustainability considerations into its overall business strategy.
This innovative collaboration with Elite Commercial REIT’s primary occupier, DWP, marks a commitment by both the landlord and the occupier to achieve sustainability goals such as the U.K. government’s commitment to achieve net zero carbon emissions by 2050.”