Edison initiates coverage of Secure Income REIT

London, UK, 19 September 2016

Edison initiates coverage of Secure Income REIT (SIR)

Secure Income REIT (Secure) targets predictable cash flows from a broad range of real estate assets, which offer very long leases (average unexpired lease term more than 23 years) subject to annual fixed or RPI linked rent uplifts, to high-quality tenants providing strong covenants. The external manager has a strong track record, with interests strongly aligned to other shareholders. The prospects for medium-term dividend growth are very strong, while NAV should also grow at unchanged yields. The starting valuation seems modest compared with similar defensive sector peers.

Long leases, upward-only rent increases, and predictable administration and finance costs provide a high degree of medium-term visibility. Consensus expectations of medium-term RPI of c 3% imply 6.5% pa DPS growth to 2022 and, on an unchanged valuation yield, c 11% pa EPRA NAV total return.

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