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United Hampshire US REIT posts 8.1% increase in 3QFY2022 distributable income to US$8.3 million

Samantha Chiew
Samantha Chiew • 4 min read
United Hampshire US REIT posts 8.1% increase in 3QFY2022 distributable income to US$8.3 million
UHREIT posts improvements in 3QFY2022.
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In its latest 3QFY2022 ended September business update, the manager of United Hampshire US REIT (UHREIT) announced that its distributable income for 3QFY2022 ended September of US$8.3 million ($11.6 million) was 8.1% higher than 3QFY2021. Contributions from UHREIT’s third DPU accretive asset, Upland Square Shopping Center, completed on July 28, has boosted 3QFY2022 distributable income.

Supported by a resilient portfolio that generated higher revenue from both existing properties and the three properties acquired since the 4QFY2021, gross revenue for 3QFY2022 rose 24.7% y-o-y to US$17.0 million from US$13.6 million a year ago, whilst net property income (NPI) was US$11.9 million, 15.2% higher than the US$10.3 million achieved in the previous year.

For the year-to-date ended September period, distributable income of US$24.6 million was 7.5% higher than a year ago.

In 3QFY2022, UHREIT delivered strong leasing progress with 11 new and renewal leases totalling approximately 67,139 sq ft. There is minimal lease rollover of only 0.6% expiring for the balance of 2022. As at Sept 30, the committed occupancy of the grocery & necessity portfolio reached a new high at 96.7%1 , with a long weighted average lease expiry (WALE) of 7.6 years.

The acquisition of Upland Square has further increased tenant diversification, and the contribution from the top 10 tenants decreased from 66.1% in 3QFY2021 to 56.2% in 3QFY2022. According to the REIT, this improvement will enhance the underlying stability and resiliency of the cash flow generated by the portfolio.

At the same time, UHREIT maintained the portfolio focus on cycle-agnostic tenants providing essential services. In 2QFY2022, UHREIT optimised its self-storage portfolio with the divestment of Elizabeth and Perth Amboy Self-Storage properties. As at Sept 30, the occupancy of the two remaining Self-Storage properties, Carteret and Millburn remained at high levels of 93.9%, with quarterly net rental rates trending upwards.

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Overall, with the successful completion of the acquisitions of three accretive assets – Colonial Square, Penrose Plaza and Upland Square – UHREIT successfully grew its total property value by 25.8% to US$735.7 million, up from US$584.6 million at IPO.

Robert Schmitt, CEO of the manager says, “UHREIT continued to deliver steady growth underpinned by our enlarged portfolio. We have seen a positive contribution from our third and largest accretive acquisition, Upland Square, to further enhance income visibility and resilience. At a level of 96.7% , our grocery & necessity portfolio committed occupancy rate has also continued to improve as a result of strong leasing momentum to cycle-agnostic tenants providing essential services.”

The way Schmitt sees it, the REIT’s unique asset class, comprising mainly of grocery anchored & necessity based retail properties, has and will continue to weather well. These suburban open-air strip centres serve a niche segment of the retail market, one that is mainly focused on serving day-to-day necessity goods and services in demand by the US consumers.

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Despite concerns of a potential recession, Schmitt believes that consumers will continue to spend on grocery and essential items. It has been observed that non-discretionary spending and grocery sales rose faster and well above the growth for discretionary goods spending in September.

To that end, Schmitt says that the resiliency of the REIT’s strip centres can also be observed in the rebound of footfall traffic. The wide range of new economy omnichannel strategies adopted by its tenants supports an emerging retailing trend, whereby consumers embrace a balance of in-store and online shopping post-pandemic.

“We are heartened that our continual education on the unique value proposition of our asset class has resulted in increased market visibility for UHREIT. Our recent inclusion into iEdge SG Real Estate Index, iEdge S-REIT Index and iEdge SG ESG Transparency Index will further boost the profile and overall awareness of UHREIT with various global real estate equity funds and investors,” adds Schmitt.

Units in UHREIT last traded at 48 US cents on Nov 8.

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