UNITED Hampshire US Reit ODBU : ODBU 0% reported a distribution per unit (DPU) of US$0.0305 for the second half of the fiscal year ended December 2021, up 0.7 per cent from a DPU of US$0.0303 in the comparable year-ago period.

This took the Reit's DPU for the full FY2021 to US$0.061, some 26.8 per cent higher than the DPU of US$0.0481 in FY2020. The DPU for FY2021 also exceeded the Reit's forecast by a marginal 0.2 per cent.

Gross revenue for H2 was up 7.9 per cent year on year to US$28.4 million from US$26.3 million, but 1.4 per cent lower than the forecast.

Property expenses for the period were up 6.7 per cent to US$7.8 million from US$7.3 million, but this was 7 per cent lower than the forecast.

United Hampshire US Reit attributed the variance to slower leasing activities than was forecast - which was made prior to the outbreak of the Covid-19 pandemic. This was, however, offset by contributions from Colonial Square in Richmond, Virginia, and Penrose Plaza in Philadelphia, Pennsylvania; these were acquired last November and contributed about 1.5 months worth of revenue to the H2 results.

The group also received higher top-up income attributable to Elizabeth Self-Storage and Perth Amboy Self-Storage in New Jersey in H2.

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Net property income was up 8.7 per cent to US$21.5 million on the back of contributions from newly acquired assets.

Net income available for distribution to unitholders rose 6.4 per cent to US$16 million from US$15 million, surpassing forecasts by 4.6 per cent.

United Hampshire US Reit in a separate announcement on Wednesday said that it has entered into a conditional sale-and-purchase agreement with Storage Post to divest its two freehold self-storage properties - Elizabeth and Perth Amboy - for a total consideration of US$49 million.

The consideration was agreed on a willing-buyer, willing-seller basis. The independent valuation for both the properties stood at US$44.4 million as at end-December last year, said a valuation report by Cushman & Wakefield.

The sale price is 12.9 per cent above the purchase price of US$43.4 million inclusive of top-ups, and 26.7 per cent above the purchase price of US$38.7 million excluding top-ups.

The estimated net proceeds from the divestment are approximately US$47.5 million, after providing for the estimated transaction costs of about US$1.5 million.

United Hampshire US Reit is set to recognise an estimated divestment gain of some US$3.1 million over the valuation of US$44.4 million. The estimated cumulative divestment gain over book value of the 2 properties is US$8.9 million.

The divestment is in line with the Reit manager's pro-active portfolio management strategy to maximise the operational performance of assets and capitalise on opportunities to improve financial flexibility.

The transaction will also enable the group to optimise its capital structure and enhance long-term sustainable returns for unitholders, and realise capital gains from the properties, said the Reit.

Due to the strength and resilience of the grocery and necessity and self-storage sectors, the Reit saw a portfolio valuation increase of 3.7 per cent as at Dec 31 last year.

The grocery and necessity portfolio experienced robust leasing momentum, with the execution of 38 new and renewal leases for a total of 437,528 square feet (sq ft). The properties in this portfolio also had a committed occupancy of 95.3 per cent and a weighted average lease expiry of 8 years as at end-December last year. United Hampshire US Reit is expecting to book organic income growth from this segment as most of the leases have built-in rental increases during their lease terms.

In the self-storage segment, occupancies have also continued to track higher. The Elizabeth and Perth Amboy self-storage properties booked occupancies of 64.1 per cent and 44.8 per cent respectively as at end-December; occupancies at Millburn and Carteret stood at 94.8 per cent and 88.1 respectively.

United Hampshire US Reit has an aggregate leverage of 39 per cent. The Reit said it has sufficient financial flexibility to prudently pursue new acquisitions and asset enhancement initiatives.

Robert Schmitt, chief executive of the manager, said: "The global pandemic has reshaped consumer behaviour and provided an opportunity for our grocery and necessity properties to be key nodes in the last-mile delivery process for our tenants.

"Overall, while grocers and wholesale clubs continue to lead the pack with strong demand generated by extended work-from-home protocols, other retail categories, such as off-price apparel and fitness centres, have also recovered from their pandemic lows and are seeing a return of foot traffic, with both full-service as well as quick-service restaurants benefiting from substantial pent-up demand to dine out."

He added that the Reit will continue to actively look for suitable assets that fit its investment criteria, with a focus on strategically located neighbourhoods with limited competition and high barriers to entry.

Units of United Hampshire US Reit closed on Wednesday at US$0.635, up 0.8 per cent or US$0.005.