United Hampshire US REIT - UOB Kay Hian 2025-01-15: Grocery-anchored Strip Centres Gaining Prominence As A Distinct Asset Class

• United Hampshire US REIT provides a resilient and attractive 2025 distribution yield of 9.2% and trades at P/NAV of 0.64x.
• Portfolio occupancy is on an upward trend, improving 1.3ppt q-o-q to 97.6% in 3Q24. Occupancy for strip centres has improved to 96% after many years of muted supply. Institutional investors have started to invest in strip centres due to availability of data, increase in foot traffic, higher occupancy and improved lending conditions.

Extended period of muted supply leads to high occupancy.

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• According to Green Street, strip centres have the least new supply coming on-stream over the next five years. Occupancy for strip centres has improved to 96%. Thus, landlords have gained bargaining power.
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Convenient location boosts foot traffic.

• Open-air strip centres are typically anchored by grocery stores and supermarkets. They are located along major roads and within the catchment of large residential populations in the suburbs, making them extremely accessible. Consumers make frequent short-duration visits to strip centres when they run their errands and purchase daily necessities.
• According to RetailStat, foot traffic at strip centres has increased by 18% compared to pre-pandemic levels.

Strip centres have adapted to facilitate e-commerce.

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Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2025-01-15 SGinvestors.io

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