United Hampshire US REIT - UOB Kay Hian 2024-03-13: Hallmark Of Defensive Strength

• United Hampshire US REIT (SGX:ODBU) is exceptionally defensive in many ways:
  • its strip centres benefit from a demographic shift towards suburban locations,
  • necessity spending accounted for a sizeable 62% of its base rental income,
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  • there is no refinancing requirement until Nov 26.
• Valuation is attractive with 2024 distribution yield at 9.7% and P/NAV at 0.64x.

Resiliency from long WALE.

• United Hampshire US REIT signed six leases totalling 100,392sf in 4Q23 (two new leases and four renewals). It achieved positive low single-digit rental reversion. It has maintained a high tenant retention ratio of 92% since its IPO.
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Resiliency from essential services.

• As of Dec 23, 61.6% of United Hampshire US REIT's base rental income was derived from tenants providing essential services. Its triple net leases require tenants to reimburse the landlord for property taxes, insurance and maintenance for common areas, which shelter United Hampshire US REIT from the negative impact of higher inflation.
• Leases for anchor tenants typically have built-in rental escalation of 5-10% for every 5-10 years. Tenants typically do not have early termination rights.

Strip centres benefit from population migration…

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Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2024-03-08 SGinvestors.io

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