REIT ASIAPAC MAGAZINE REITASIAPAC 1Q 2020 ISSUE | Page 10

REIT ASIAPAC Q INTERVIEW How has the Covid-19 pandemic and the UK lockdown affected Elite’s UK properties, and what are your plans to mitigate any impact if the shutdown lasts longer than expected? provide the REIT with ROFR to purchase. Jonathan: I think it is a very good opportunity for this REIT to grow via the ROFR pipeline because the 62 assets are located across the UK and are long-leased to the UK Government. It is very much in line with the REIT’s investment strategy. Shaldine: Despite the UK lockdown resulting from the Covid-19 pandemic, we remain positive about the stability of Elite Commercial REIT’s portfolio, backed by its uniquely counter- cyclical tenant – the Department for Work and Pensions, which provides us with steady cash flow. On that front, we have received our first three months advance rent since listing, for the period 1 April 2020 to 30 June 2020 from The Secretary of State for Housing, Communities and Local Government, in accordance with the lease agreements. In addition, our income visibility is enhanced with two of our properties having secured waivers or extension of the break options. Nevertheless, we are also closely monitoring the situation, and are holding regular dialogues with our existing tenants in line with our active tenancy management strategy.” Q Q Would you consider going beyond the UK, say to other European countries? Shaldine: The investment mandate within the prospectus stated that this REIT will be UK-focused. Joel: There is sufficient liquid stock available in the UK that doesn’t warrant going out of the country. It is common for REITs with assets in Singapore to go abroad because Singapore is too small, and they need to find other investment stock. I don’t think we would have the same limitations. Being the first British-pound denominated REIT in Singapore, what unique opportunities are you looking to tap? Similarly, what unique opportunities are in store for Singaporean investors looking into investing in your REIT? Q Jobscentre Plus at High Road, Ilford What is your growth strategy in the medium term? As early as now are you expecting acquisitions (local or overseas), asset enhancement and redevelopment down the line after the IPO? Shaldine: One of the key focus is growth, as we are relatively small in the Singapore REIT market. We are also looking to tap into certain indexes to attract even more institutional investors in the longer term. Jonathan: There are broadly three ways that we’re looking to grow this REIT. We can look at the traditional route of asset enhancement, development of any excess land potentially, as well as growth via acquisitions. Jonathan: The UK is a huge real estate market. It is the second- most traded real estate market globally and consistently outperforms all other European countries in terms of investment volumes. So that means that there’s a very deep pool of asset acquisition opportunities. Also, the UK Government, which is our tenant, is reported to be one of the largest occupiers of real estate. Since the mid-90s, the UK Government has gone asset- light, which means that there’s a very deep and liquid market for real estate assets let to the UK Government. First and foremost, all our properties are leased to the UK Government, so anything we do on the existing portfolio will need to be in agreement with the UK Government. There are clear opportunities that exist, and they are primarily through the potential to grow the portfolio on the existing land that the REIT owns, which is more than 47 hectares of land across towns and cities in the UK. One asset, which is highlighted in the prospectus, is Peel Park in Blackpool. It has almost 12 hectares of undeveloped grassland. The UK Government is actively investing in regenerating Blackpool. We understand that they have been looking at our asset as a potential place to grow into a government hub. We see some good opportunities to acquire assets that are accretive for the REIT’s dividend profile. We are focused on accessing assets in the UK market as the main driver for growth. Shaldine: We do have a ROFR (Right of First Refusal) from the sponsors, which provides growth opportunities. In the UK, real estate transactions tend to transact faster than in Asia. The completion timeline is usually very compact, and ideally, you would want to have the capital on hand to complete a transaction. In addition to acquiring assets by the REIT directly, we also have sponsors that are committed to acquire and hold the assets and We have had discussions with them about how to bring forward a proposal to increase the amount of lettable area on our property, so that will be one of the key growth drivers of the REIT. There are also opportunities which may come through on a longer term where asset values could be enhanced. In the UK, there’s a system called Permitted Development Rights, which means any Glasgow Benefits Centre, Scotland 10 11