The manager of United Hampshire US REIT (UHREIT) has announced it is acquiring two grocery-anchored freehold assets for a total consideration of approximately US$78.25 mil ($106.18 million).
The manager has also launched a private placement on Oct 5 to raise gross proceeds of no less than US$30 mil, which will be used to partially fund the acquisition.
The freehold grocery assets comprise Penrose Plaza in Pennsylvania and Colonial Square in Virginia. The deal marks UHREIT’s maiden acquisition post its initial public offer in 2020, as well as its entry into the two locations which are located along the eastern seaboard of the US.
The purchase consideration is 3.9% lower than the independent valuation of US$81.35 million.
According to the manager, the proposed acquisition is distribution per unit (DPU) accretive. UHREIT’s portfolio value is expected to grow 13.3% from US$587.1 million to US$665.4 million, while UHREIT’s market capitalisation will increase 9.9% from US$332.2 million to around US$365.2 million post-acquisition.
Post-acquisition, the contribution from UHREIT's top 10 tenants within its portfolio will reduce from the current 66.2% to 61.0%, providing further tenant diversification and stabilising the portfolio’s income. The enlarged portfolio’s weighted average lease expire (WALE) will increase to 8.1 years, while the committed occupancy for UHREIT's grocery & necessity portfolio will remain at 94.8%.
UHREIT will purchase Penrose Plaza for US$52 million. Penrose Plaza has a net lettable area (NLA) of approximate 258,494 sq ft, with a committed occupancy rate of 94.1% and a weighted average lease expiry (WALE) of 9.2 years.
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The property has 27 tenants and is anchored by ShopRite, the largest food retailer in the Greater Philadelphia, New Jersey and New York metropolitan area. Other major tenants include dd’s DISCOUNTS, Dollar Tree, and Citi Trends.
Colonial Square is being purchased for $26.25 million. The asset has an NLA of approximately 168,326 sq ft, with an occupancy rate f 99.1% and a WALE of about 6.6 years.
The property is leased to 20 tenants and is anchored by Publix, one of the largest US grocery chains with 1,272 locations in Southeastern US. Other major tenants include Locke Supply Co, Wells Fargo, and Dollar General.
The total acquisition cost will be financed with a combination of loan and proceeds from the proposed private placement to institutional and other investors.
The manager is proposing to issue new units in UHREIT priced between 62 US cents to 64 US cents, with net proceeds of approximately US$28.9 million expected to be raised from the placement.
The issue price range represents a discount of approximately 1.9% to 4.97% to the adjusted volume weighted average price per unit as of Oct 4 up until the time the placement agreement was signed.
United Overseas Bank and UOB Kay Hian have been appointed joint bookrunners and underwriters for the private placement.
Units in UHREIT closed at 66.5 US cents on Oct 4 before trading was halted this morning.
Photo of Penrose Plaza: UHREIT
