SINGAPORE (Feb 25): United Hampshire US REIT, sponsored by Hampshire Companies and UOB Global Capital, lodged its prospectus on Feb 25. Hampshire Companies is an established U.S. real estate manager with over 60 years of track record and deep hands-on asset management expert who has worked with United Overseas Bank for more than 10 years. The yield at the IPO price is more than 7%.
The initial portfolio of the REIT comprises 18 grocery and necessity properties with a total NLA of 2.86 million sq ft and four self-storage properties with a total NLA of 0.31 million sq ft. along the east coast of the US, in Massachusetts, New York, New Jersey, Maryland, North Carolina and Florida. The properties are being acquired for US$584.6 million.
Grocery and necessity-anchored shopping centres and self-storage are amongst the most recession resistant, cycle-agnostic, and stable property types in the US according to independent market research. Self-storage caters to life changes. For instance, in economic downturns, families may need to downsize their home or move into a smaller multi-family dwelling, increasing demand for self-storage space as excess household items need to be stored. During the Global Financial Crisis in2009, rents for the US self-storage sector only decreased by approximately 2% while occupancy only dropped by 4%.
The portfolio has an occupancy of 95.2% as at Sept 30, 2019. The grocery & necessity properties have a WALE by base rental income from Sept 2019 of 8.4 years with only 8.6% of base rental income expiring in 2020 and 2021. The grocery & necessity properties’ tenant retention based on leasable area is 97.6%. Almost all leases are triple net leases.
There is some income support to provide unitholders with downside protection and allow the Net Operating Income of the REIT to better reflect the potential of the development and newly completed properties.
The REIT has attracted interesting cornerstones. Golden Sun (China) is an investment company incorporated in Hong Kong whose owner is Dato’ Swee Lian Woo who is CEO of Perfect Global Management, whose major business includes selling of health food, household, skincare and personal care products.
A private investment company, Kuang Ming Investments, owned by Philip Ng and his family, is another cornerstone as is Helen Chow, a director of Wing Tai Holdings. Phillip Securities is subscribing to the cornerstone units for its own house subscription and on behalf of its clients. Other cornerstone investors include institutional names such as Kasikorn Asset Management and Bangkok Life Assurance.
Private banking clients of UBS, HSBC, Credit Suisse and United Overseas Bank make up the remaining cornerstone subscribers.
The investors of the private funds holding the IPO portfolio will also be rolling over their investments into the REIT.