SINGAPORE (Mar 3): The manager of United Hampshire US Real Estate Investment Trust has registered the prospectus for the proposed offering and listing of units of the REIT on the Mainboard of the Singapore Exchange (SGX).
Based on the offering price of US$0.80 ($1.12) per unit, United Hampshire US REIT offers a distribution yield of 7.4% in Forecast Period 2020 (FP2020) – the 10-month period from Mar 1, to Dec 31, 2020.
Distribution yield growth is expected to be 2.7% higher at 7.6% for Projection Year 2021 (PY2021) ending Dec 31, 2021.
Subject to the over-allotment option, the offering comprises an international placement tranche of around 80.33 million units to investors outside the US, and a Singapore public offer of some 7.5 million units.
Concurrently with, but separate from the offering, affiliates and a subsidiary of the sponsors have entered into a separate subscription agreements to subscribe for a total of 88.79 million sponsor units at the offering price.
Together, the sponsors – UOB Global Capital and The Hampshire Companies – have over 10 years of long standing partnership, having jointly formed three funds with combined assets under management (AUM) of approximately US$1.1 billion.
In addition, cornerstone investors have also entered into separate subscription agreements to subscribe for an aggregate of 300 million cornerstone units at the offering price.
Further, rollover investors Davinia Investments and Steamboat Apollo have also entered into separate subscription agreements to subscribe for an aggregate of 16.66 million rollover units at the offering price.
“We are pleased to have received strong support from cornerstone and institutional investors for our offering. This is a clear indication of confidence in US consumption growth and our unique portfolio of assets which serves two recession-resistant, cycle-agnostic sectors focused on necessity consumption that are amongst the most stable sectors in the country,” says Robert Schmitt, CEO of the manager.
In total, gross proceeds of approximately US$394.6 million are expected to be raised from the offering, the issuance of the sponsors units, the cornerstone units and the rollover units.
The public offer for United Hampshire US REIT – Asia’s first US grocery-anchored shopping centre and self-storage REIT – will open at 9am on Wednesday (Mar 4), and close at 12 noon on Mar 10.
Trading in the units of United Hampshire US REIT is expected to commence at 2pm on Mar 12.
The REIT’s initial portfolio of 22 assets comprises 18 predominantly freehold grocery-anchored and necessity-based retail properties, as well as four modern, climate-controlled self-storage facilities.
The properties are primarily concentrated in the densely populated and affluent Northeast markets of the US.
The predominantly freehold quality portfolio has an appraised value of approximately US$599.2 million and an aggregate net lettable area (NLA) of approximately 3.17 million sq ft.
The REIT’s distinctive portfolio enjoys a high existing occupancy of 95.2%, backed by a strong tenant base which include some of the largest grocers, wholesalers, home improvement retailers, and discount retailers in the US.
It has a long weighted average lease expiry (WALE) of 8.4 years by base rental income (BRI), with the top 10 tenants contributing 66.7% of BRI in September 2019.
The leases are almost all “triple net” leases, with tenants responsible for their pro-rata share of all real estate taxes, building insurance, property expenses, and common area operating.
“These properties, which are e-commerce resistant in nature, have a balanced lease expiry profile and high occupancy, offering stable and sustainable cash flows that aims to drive resilient and stable distributions for unitholders, while we leverage on our sponsors’ joint sector and regional expertise as well as financial strength,” says Schmitt.
United Hampshire US REIT is expected to have an aggregate leverage ratio of approximately 37.0% as at listing date.
The REIT’s distribution policy is to distribute 100% of its annual distributable income up to the end of PY2021. The distributions will be declared in US dollars.
Unitholders are subject to a maximum withholding tax rate of 30% on income they derive from US investments. Hence, unitholders must comply with certain documentation requirements in order to be exempted from certain withholding tax.
“United Hampshire US REIT benefits from the synergies and competencies of our sponsors, the financial backing of the UOB Sponsor together with the Hampshire Sponsor’s extensive experience in the US real estate sector,” says Tan Tong Hai, chairman of the manager.
“The combined strength of our sponsors will provide a solid growth platform for the REIT,” he adds. “Our value proposition has resonated well with institutional investors and we are looking forward to a similar strong take-up by retail investors.”
