Elite UK REIT posted distributable income of £10.06 million for the six months ended Jun 30, 2026, up 3.6 per cent year-on-year, as interest-expense savings and reduced vacancy costs offset softer headline rental income.

Revenue in the first half edged up 0.8 per cent year-on-year to £18.9 million. Distribution per unit (DPU) rose 0.6 per cent to 1.55 pence, its highest level in three years. On a like-for-like basis using the same weighted average unit base, adjusted DPU gained 3.3 per cent. The payout represents 95 per cent of distributable income.

Net property income slipped 3.3 per cent to £18.0 million, but excluding a one-off dilapidation settlement booked in the prior year, adjusted net property income improved 5 per cent. Portfolio valuation climbed 15 per cent year-to-date to £488.8 million, helped by £24.3 million of new leases with the UK Government in February that also lifted net asset value per unit 10 per cent to £0.44. Net gearing narrowed to 34.6 per cent from 47.5 per cent at end-2023, while the interest-coverage ratio held at 2.6 times; fixed-rate debt now accounts for 99 per cent of borrowings, keeping average funding cost stable at 4.7 per cent.

Operationally, occupancy remained high at 99.9 per cent. The lease regear with the Department for Work and Pensions (DWP) extended the weighted average lease expiry to 7.1 years and reduced 2028 lease-expiry concentration to 30.2 per cent. About 70 per cent of the new leases carry consumer-price-index-linked rent reviews in 2033, with the balance linked to reviews tied to optional lease extensions.

Headwinds persisted in statutory net property income because of the absence of last year’s dilapidation receipts, though these were outweighed by lower financing costs and vacancy reductions.

Strategic initiatives during the half included divestment of five assets for £9.3 million, with proceeds earmarked for acquisitions and redevelopment. Unitholders have approved the purchase of five additional government-leased properties for £2.6 million in annual rental income and a weighted average lease expiry of 12.7 years. The REIT is also converting Lindsay House in Dundee into a 170-bed purpose-built student accommodation facility at a cost of £19.4 million, scheduled to open for the academic year starting September 2027.

Chief executive officer Joshua Liaw said the stronger first-half showing reflected disciplined lease regearing, portfolio reconstitution and capital management, which together improved earnings resilience and balance-sheet flexibility. He added that the REIT, which secured a two-year extension option on its £132.3 million loan in July, will continue negotiations with lenders ahead of the next refinancing due in 2027 while progressing asset acquisitions and conversions.

Looking ahead, management remains focused on enhancing the trust’s government-backed income base and expanding into counter-cyclical sectors such as student housing and build-to-rent residential, noting that the UK economy is forecast by the IMF to grow 1 per cent in 2026 amid moderating inflation and a stable interest-rate environment.