United Hampshire US REIT (UHREIT) reported that gross revenue and net property income (NPI) for 1QFY2022 for the three months to March 21 rose ose 20.0% and 13.1% y-o-y, to US$16.2 million and US$11.4 million respectively. Distributable income for 1Q 2022 was US$8.1 million, 7.9% higher than the US$7.6 million in the same quarter a year ago.
UHREIT completed its inaugural acquisitions of Colonial Square on Nov 12 2021 and Penrose Plaza on Nov 24 2021.These acquisitions have contributed positively to 1Q2022 distributable income. UHREIT’s portfolio comprises 20 Grocery & Necessity & 4 Self-Storage Properties located across eight states along the US East Coast.
“Occupancy for Grocery & Necessity Properties has increased further to 96.4%, the highest since IPO. Overall, a diverse cross section of tenants i.e. Consumer Services, Consumer Goods, Food & Beverage (F&B), Fitness, Discount/Outlet, form a majority of the new and renewal leases signed during this period,” notes Robert Schmitt, CEO of UHREIT’s manager.
RHB Research identified UHREIT as one of its 50 gems, and believes that UHREIT is misunderstood as evidenced by its high trading yield. “Although classified as a retail REIT, UHREIT mainly caters to the suburban grocery & necessity segment (87%), which is less impacted by rising e-commerce and also serves as microfulfilment centres of leading retailers' Omni channel platform. This is demonstrated by stable footfall and continued demand for space despite Covid,” states a recent RHB Research note.
UHREIT’s top 5 tenants, which account for around 44% of rental income are well known grocery chains – Shoprite (12.2%), BJ Wholesale Club (11.7%), Stop & Shop (9%), Lowe’s (5.9%) and Walmart (4.9%). “These tenants have thrived on the Covid-led demand surge for groceries and necessities with same store sales surging double digits in the last two years. Their quick adoption of omni-channel strategies such as expansion of curbside pickup, buy online pickup in store options, and same day delivery by many retailers have enabled them to boost customer experience and limit e-commerce threats,” RHB Research observes.
Based on its closing price of 61 US cents on May 12, UHREIT is trading at a yield of 10%.
