United Hampshire US REIT reports 1H21 net property income came in slightly under IPO forecast

U.S. five dollar currency notes bills; taken September 2018.

United Hampshire US REIT reported Thursday its first half net property income came in at US$20.47 million, 0.5 percent below the forecast from its initial public offering (IPO) prospectus.

Gross revenue for the January-to-June period was US$26.80 million, 3.4 percent below the IPO forecast, the REIT said in a filing to SGX.

The distribution per unit (DPU) is 3.05 U.S. cents, compared with 3.02 U.S. cents projected in the IPO prospectus, the REIT said.

The IPO projections were made in March 2020, before WHO declared the Covid-19 virus a pandemic, with the results’ variance due to the pandemic’s impact on leasing activities on the portfolio properties, United Hampshire US REIT said.

The grocery and necessity properties posted a committed occupancy rate of 94.8 percent as of end-June and rental collections were strong at 99 percent, with grocery and home improvement tenants maintaining strong sales, the REIT said.

“We have continued to experience resiliency for our Grocery & Necessity Properties, which are strip centers leased to cycle agnostic tenants providing essential services. The market has seen a recovery in retail foot traffic with the gradual opening of the economy,” Robert Schmitt, CEO of the REIT’s manager, said in the statement.

“Our Grocery and Home Improvement tenants have continued to maintain strong sales throughout this period; whilst Food & Beverage and Consumer Services tenants have also seen a strong improvement in performance and have formed the majority of the new and renewal leases signed during this period,” he said.

The self-storage properties’ occupancies continued to trend upward since the gradual easing of lockdown guidelines from May 2020, the REIT said. The Perth Amboy Self-Storage property, which began leasing in January, has nearly doubled occupancy to 25 percent at end-June, from 12.9 percent at end-March, the REIT said.

Schmitt said the pandemic has impacted self-storage leasing activity and rental rates, including an anti-price-gouging law at the U.S. federal level to limit landlords’ ability to raise rents on existing customers.

“However, occupancies have been trending upwards after Covid-19 related lockdown guidelines were loosened. We anticipate we will have opportunities to accelerate rental rate increases when these rental rate caps are lifted. The socio-economic dynamics including work-from-home trends, continued upward momentum in home ownership, accelerated suburban migration and smaller housing arrangements, will continue to boost the sector,” Schmitt said.

The REIT’s portfolio has 18 grocery and necessity properties and four self-storage properties.