United Hampshire US REIT (UHREIT) has reported a gross revenue of US$18.1 million for the 1QFY2025 ended March 31, 2% lower y-o-y, due mainly to the divestments of Freestanding Lowe’s and Sam’s Club within Hudson Valley Plaza and the Albany Supermarket in August 2024 and January this year, respectively.
On a like-for-like basis and excluding the effects of the divestments, UHREIT’s gross revenue improved by 3.2% y-o-y, thanks to rental income from its new anchor tenants, Dick’s Sporting Goods at Upland Square and Trader Joe’s at Lynncroft Center. Dick’s Sporting Goods commenced its business in July 2024 while Trader Joe’s opened in November 2024. The increase was also due to rental escalations from existing leases.
Net property income (NPI) for the quarter fell by 8.4% y-o-y to US$11.7 million, although NPI was only down by 1.5% y-o-y excluding the divestments.
Distributable income for the quarter fell by 1.4% y-o-y to US$6.3 million.
As at March 31, UHREIT’s aggregate leverage stood at 39.2%, 3 percentage points lower y-o-y. Interest coverage ratio (ICR) stood at 2.5 times, lower than the 2.6 times as at March 31, 2024.
According to the REIT manager, a 10% decrease in its ebitda will lead to an ICR of 2.3 times while a 100 basis point increase in the weighted average interest rate will bring the REIT’s ICR to 2.1 times.
As at March 31, the REIT’s weighted average interest rate stood at 5.21% while its weighted average debt maturity stood at 2.1 years.
As at the same period, the occupancy rate for UHREIT’s grocery & necessary properties stood at 97.2% while occupancy for its self-storage properties came in at 93.6%. The REIT’s weighted average lease expiry (WALE) stood at 7.8 years. In 1QFY2024, UHREIT’s portfolio occupancy stood at 95.7% while WALE stood at 7.9 years.
“UHREIT’s operational performance remains strong as a result of our proactive portfolio management and resilient tenant base with tenants providing essential services comprising 58.4% of our grocery & necessity portfolio,” says Gerard Yuen, CEO of the manager.
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“As part of our capital recycling strategy, the divestments of Lowe’s and Sam’s Club within Hudson Valley Plaza and Albany Supermarket have reduced our gearing and provided ample headroom for potentially accretive acquisitions to grow our portfolio and ultimately enhance unitholder value,” he adds, noting that the group is also beginning to “reap the benefits” from its new anchor tenants, including Trader Joe’s at Lynncroft and Dick’s Sporting Goods at Upland Square. The REIT is also benefitting from a a lower secured overnight financing rate (SOFR) following the US Federal Reserve’s three rate cuts in late 2024, says Yuen.
Looking ahead, the REIT sees the strip centre sector continuing to enjoy positive tailwinds from a mix of minimal supply growth and strong demand for space by retailers. Supply growth is also expected to remain muted over the next five years.
The REIT’s properties within the self-storage sector is also expected to remain “robust” due to the relative undersupply of such facilities in the New York Metropolitan Area.
Units in UHREIT closed 0.5 US cents higher or 1.14% up at 44.5 US cents on May 13.
