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Sunday, March 06, 2022

United Hampshire US REIT Review @ 6 March 2022

Basic Profile & Key Statistics

United Hampshire US REIT (UHREIT) invests in Retail and Logistics (self-storage) properties which currently owns 24 properties in U.S.

Performance Highlight

As compared to 2H 2020, gross revenue, NPI, distributable income and DPU have improved YoY due to higher contribution from self-storage properties as well as newly acquired properties.

Tenant Sales
Tenant sales has improved YoY for the 4 anchor tenants.

Acquisition
In November 2021, UHREIT has completed the acquisition of Penrose Plaza and Colonial Square.

Divestment
UHREIT has announced for proposed divestment for Elizabeth and Perth Amboy self-storage properties. The divestment gain is at US$ 3.1 mil, which is around 7% over valuation. This divestment is expected to be complete by 2Q 2022.

Related Parties Shareholding

  • REIT sponsor's shareholding is low at 0.063%
  • REIT manager's shareholding is low at 0.376%
  • Directors of REIT manager's shareholding is high at 0.439%

Lease Profile

  • Occupancy is slightly high at 95.3%
  • WALE is long at 8 years
  • Highest lease expiry within 5 years is low at 9.3% which falls in 2024
  • Weighted average land lease expiry is long at 97.55 years

Debt Profile

  • Gearing ratio is moderate at 39%
  • Cost of debt is high at 2.63%
  • Fixed rate debt % is slightly high at 79.6%
  • All debts are secured debts
  • WADM is short at 2.5 years
  • Highest debt maturity within 5 years is high at 50%, which falls in 2024
  • Interest coverage ratio is high at 6.5 times

Diversification Profile

  • Top geographical contribution is low at 32.2% 
  • Top property contribution is low at 13.9% 
  • Top 5 properties contribution is low at 43% 
  • Top tenant contribution is moderate at 12.7% 
  • Top 10 tenants contribution is high at 63.5%

Key Financial Metrics

  • Property yield is high at 6.6% 
  • Management fees over distribution is low at 10.1% in which unitholders receive US$ 9.90 for every dollar paid 
  • Distribution on capital is high at 5%
  • Distribution margin is moderate at 48.3%
  • 9.8% of the TTM DPU is from income support

Trends

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

Relative Valuation

  • P/NAV - Below -1SD for 1y, Average for 3y
  • Dividend Yield - Above +1SD for 1y, Average for 3y

Author's Opinion

FavorableLess Favorable
High Directors of REIT Manager's ShareholdingLow REIT Sponsor's Shareholding
Long WALELow REIT Manager's Shareholding
No Major Lease Expiry within 5 YearsHigh Cost of Debt
Long Weighted Average Land Lease Expiry0% Unsecured Debt
High Interest Coverage RatioShort WADM
Low Top Geographical ContributionConcentrated Debt Maturity
Low Top Property & Top 5 Properties ContributionsHigh Top 10 Tenants Contribution
High Property Yield 
Competitive Management Fees 
High Distribution on Capital 
Interest Coverage Ratio Uptrend 
Distribution Margin Uptrend

The full half yearly contribution from the 2 newly acquired properties would improve UHREIT performance moving forward. However, it would be offset by loss of income from the divestment of Elizabeth and Perth Amboy self-storage properties which is target to complete by 2Q 2022. Let's see later whether managements would acquire any property after the divestment.


You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts


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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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