United Hampshire US REIT 1Q23 - UOB Kay Hian 2023-05-16: Strip Centres At The Forefront Of A Retail Recovery

• Retail real estate in the US demonstrated resiliency with 10 consecutive quarters of positive net absorption. According to CBRE, strip centres are leading the recovery with rent growth of 2.7% y-o-y in 1Q23.
• United Hampshire US REIT’s strip centres cater to necessity spending and have long WALE of 7.4 years. Occupancy has improved marginally by 0.1ppt q-o-q to a record 97.0% in 1Q23.
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United Hampshire US REIT's 1Q23 Business Update

• United Hampshire US REIT (SGX:ODBU) reported distributable income of US$8.8m for 1Q23 (+7.6% y-o-y), which is slightly above expectations. See United Hampshire US REIT's announcement dated 12 May 2023.
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• United Hampshire US REIT achieved positive low single-digit rental reversion for seven leases (new lease: one and renewal leases: six) covering 217,089sf of retail space executed in 1Q23. Of the six renewal leases, three leases were signed at higher rents and two leases provided higher rents based on contractual rental escalation. There is minimal leasing risk with only 2.1% of leases expiring during the rest of 2023. Committed occupancy for grocery & necessity properties edged marginally higher by 0.1ppt q-o-q to 97.0% in 1Q23.
• Walmart has exercised its 5-year renewal option at Hudson Valley Plaza in Kingston, New York. Walmart, United Hampshire US REIT’s 6th largest tenant, accounted for 4.3% of gross rental income. The lease extension demonstrates the attractiveness of United Hampshire US REIT’s properties.

Resiliency from essential services and long WALE.

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Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2023-05-16 SGinvestors.io

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