United Hampshire US REIT Review @ 27 February 2023

Basic Profile & Key Statistics

• Main Sector(s): Retail & Logistics (Self-Storage)
• Country(s) with Assets: United States
• No. of Properties (exclude development/associate/fund): 23

Key Indicators

Performance Highlight

Gross revenue, NPI and distributable income increased yoy mainly due to contributions from Colonial Square, Penrose Plaza and Upland Square which were acquired between Nov 2021 to Jul 2022. DPU on the other hand declined slightly due to the absence of income support. Excluding the income support in 2H FY21, DPU improved by 5.7% yoy.

Development

UHREIT would develop a new building on ST. Lucie West excess land for Acedemy Sports and target to complete by Q1 2025.

Asset Enhancement Initiative

UHREIT has achieved more than the FY22 target for its environmental target. 

Distribution Breakdown

• Distributable Income Breakdown:
• 89.5% from Operation
• 10% from Fees Payable/Paid in Units
• 0.5% from Income Support
• Distribution = 100% of Distributable Income

Related Parties Shareholding

• REIT Sponsor's Shareholding: Below median for more than 20%
• REIT Manager's Shareholding: Below median for more than 20%
• Directors of REIT Manager's Shareholding: Above median for more than 20%

Lease Profile

• Occupancy: ± 5% from median
• WALE: Above median for more than 20%
• Highest Lease Expiry within 5 Years: Below median for more than 20%; Falls in 2027
• Weighted Average Land Lease Expiry: Above median for more than 20%

Debt Profile

• Gearing Ratio:  Above median for more than 10%
• Cost of Debt: Below median for more than 10%
• Fixed Rate Debt %: ± 10% from median
• Unsecured Debt %: 0%
• WADM: Above median for more than 20%
• Highest Debt Maturity within 5 Years: ± 10% from median; Falls in 2026
• Interest Coverage Ratio: Below median for more than 10%

Diversification Profile

• Top Geographical Contribution: Below median for more than 20%
• Top Property Contribution: Below median for more than 20%
• Top 5 Properties' Contribution: Below median for more than 20%
• Top Tenant Contribution: ± 10% from median
• Top 10 Tenants' Contribution: Above median for more than 20%

Key Financial Metrics

• Property Yield: Above median for more than 20%
• Management Fees over Distribution: Below median for more than 20%; $10 distribution for every dollar paid 
• Distribution on Capital: Above median for more than 20%
• Distribution Margin: ± 10% from median

Trends

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

Relative Valuation

• P/NAV: Below -1SD for 1y & 3y
• Dividend Yield: Above average for 1y; Above +1SD for 3y

Author's Opinion

Favorable	Less Favorable
High Directors of REIT Manager's Shareholding	Low REIT Sponsor's Shareholding
Long WALE	Low REIT Manager's Shareholding
Well Spread Lease Expiry	High Gearing Ratio
Long Weighted Average Land Lease Expiry	0% Unsecured Debt
Low Cost of Debt	Low Interest Coverage Ratio
Long WADM	High Top 10 Tenants' Contribution
Low Top Geographical Contribution	Interest Coverage Ratio Downtrend
Low Top Property & Top 5 Properties' Contributions	Distribution on Capital Downtrend
High Property Yield
Competitive Management Fees
High Distribution on Capital

Performance has improved as compared to the previous quarter due to the full quarter contribution from Upland Square. With the loan refinancing, there will be no debt maturity in 2023, and coupled with an 81.4% fixed rate, the risk of increasing finance costs is mitigated. Going forward, UHREIT is expected to benefit from improving grocery and retail sales and strong consumer spending.

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and details of Singapore REIT

REIT Review - List of previous REIT review posts

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.