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Thursday, September 02, 2021

United Hampshire US REIT Review @ 2 September 2021

Basic Profile & Key Statistics

United Hampshire US REIT (UHREIT) invests in Retail and Logistics (self-storage) properties which currently owns 22 properties in U.S.

Performance Highlight

Distributable income and DPU are slightly higher than IPO forecast despite gross revenue and NPI are lower than forecast. 


Some of the anchor tenants have shown improvement in sales for their 1Q result. 
 
Carteret Self-Storage and Milburn Self-Storage continue to maintain a high level of occupancy while Elizabeth Self-Storage and Perth Amboy Self-Storage continue to trend upward. Note that the construction of Perth Amboy Self-Storage was only completed and started the lease in January 2021.

Related Parties Shareholding

  • REIT sponsor's shareholding is low at 8.91%
  • REIT manager's shareholding is low at 0%
  • Directors of REIT manager's shareholding is low at 0.07%

Lease Profile

  • Occupancy is moderate at 94.8%
  • WALE is long at 8 years
  • Highest lease expiry within 5 years is low at 9.5% which falls in 2024
  • Weighted average land lease expiry is long at 97.33 years

Debt Profile

  • Gearing ratio is moderate at 36.4%
  • Cost of debt is high at 2.85%
  • All debts are fixed-rate debts
  • All debts are secured debts
  • WADM is moderate at 3 years
  • Highest debt maturity within 5 years is high at 42.1%, which falls in 2023
  • Interest coverage ratio is high at 6.6 times

Diversification Profile

  • Top geographical contribution is low at 33.8 % 
  • Top property contribution is low at 14% 
  • Top 5 properties contribution is slightly low at 43.3% 
  • Top tenant contribution is high at 13.4% 
  • Top 10 tenants contribution is high at 66.5%

Key Financial Metrics

  • Property yield is high at 6.6% 
  • Management fees over distribution is low at 10.2% in which unitholders receive US$ 9.80 for every dollar paid 
  • Distribution on capital is high at 5.1%
  • Distribution margin is low at 44.5%
  • 12.8% of the past 12 months DPU is from income support

Trends

  • Uptrend - Interest Coverage Ratio, Property Yield
  • Slight Uptrend - Distribution on Capital
  • Flat - DPU, NAV per Unit
  • Slight Downtrend - Distribution Margin

Relative Valuation

  • P/NAV - Above average for 1y, above +1SD for 1y and 3y
  • Dividend Yield - Below -average for 1y, below -1SD for 3y

Author's Opinion

 Favorable Less Favorable
Long WALELow REIT Sponsor's Shareholding
Well Spread Lease ExpiryLow REIT Manager's Shareholding
Long Weighted Average Land Lease ExpiryLow Directors of REIT Manager's Shareholding
100% Fixed Rate DebtHigh Cost of Debt
High Interest Coverage Ratio0% Unsecured Debt
Low Top Geographical ContributionConcentrated Debt Maturity
Low Top Property & Top 5 Properties ContributionsHigh Top Tenant & Top 10 Tenants Contributions
High Property YieldLow Distribution Margin
Competitive Management FeesHigh Income Support %
High Distribution on Capital 
Interest Coverage Ratio Uptrend 
Property Yield Uptrend

UHREIT performance remains unaffected by COVID-19 due to its Grocery & Necessity properties. With the retail sales growth coupled with improving occupancy of self-storage, UHREIT performance is expected to improve in upcoming quarters. However, do note that12.8% of the past 12 months DPU is from income support.


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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions and loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

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