HSBC: Positive on United Hampshire US REIT’s acquisitions

The Penrose Plaza in Philadelphia, Pennsylvania. United Hampshire US REIT entered a deal to acquire the property in October 2021. Credit: United Hampshire US REITThe Penrose Plaza in Philadelphia, Pennsylvania. United Hampshire US REIT entered a deal to acquire the property in October 2021. The property is anchored by a ShopRite supermarket outlet. Credit: United Hampshire US REIT

HSBC said it was positive on United Hampshire US REIT’s first acquisitions since it was listed on SGX in March 2020.

United Hampshire US REIT announced Tuesday it entered a deal to buy two grocery-anchored shopping centers in the U.S. for around US$78.25 million, marking the REIT’s first post-initial public offering (IPO) acquisitions. To partially finance the acquisitions, the REIT has raised US$35 million in a private placement of 55.555 million new units priced at US$0.63 each.

In a research note Wednesday, HSBC said the purchase prices appear fair compared with the rest of the REIT’s portfolio on a per square foot valuation.

Additionally, the increase in the REIT’s market capitalization by issuing new units will help to increase trading liquidity, HSBC said.

HSBC increased its fiscal 2022 and 2023 distribution per unit (DPU) forecasts by 1 percent each, but kept its 2021 forecast unchanged as the acquisitions are likely to be completed by end-November.

The bank forecast 2021 DPU at 6.3 U.S. cents for a dividend yield of 9.5 percent, and 2022 and 2023 at 6.6 U.S. cents and 6.9 U.S. cents respectively. The 2022 and 2023 dividend yield forecasts are 9.9 percent and 10.4 percent, respectively, HSBC estimated.

HSBC kept a Buy call with an unchanged target price of US$0.85.

Units of United Hampshire ended Wednesday up 1.5 percent at US$0.675.