United Hampshire US Reit posts 27.9% drop in H2 DPU to US$0.0214

UNITED Hampshire US Real Estate Investment Trust’s (Reit) distribution per unit (DPU) fell 27.9 per cent to US$0.0214 for the second half year ended Dec 31, 2023, from US$0.0297 the year before.

Despite gross revenue advancing 1.5 per cent to US$36.2 million, net income available for distribution dropped 18.2 per cent to US$13.8 million for the second half. This was mainly due to higher interest expenses, based on the Reit’s financials released on Thursday (Feb 22).

Finance costs rose 9.5 per cent to US$8.6 million for the half year, largely due to rising interest rates and the additional revolving loan facility drawn during the period to finance capital expenditure and tenant improvements, said the manager.

Net property income (NPI) increased 1.7 per cent to US$24.8 million for the half year, from US$24.4 million.

The manager noted that it retained distributable income of US$1.3 million as capital reserves for H2. “These capital reserves will be applied for asset enhancement and development initiatives, such as the new Academy Sports + Outdoors store at Port St Lucie.”

The manager elected to receive all of its H2 base fee in cash instead of units “to preserve unitholder value and minimise unit base dilution”, contributing to lower DPU for the period.

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However, excluding the retention and payment of management fees, on a like-for-like basis, the adjusted FY2023 DPU would have been US$0.0554, 5.8 per cent lower than FY2022, as a result of the impact of higher interest expenses.

The distribution will be paid out on Mar 28, after book closure on Mar 1.

For FY2023, DPU was 18.5 per cent lower at US$0.0479, and net income available for distribution fell 8.2 per cent to US$30.4 million. Gross revenue was up 7.1 per cent to US$72.2 million, while NPI rose 7.6 per cent to US$50.6 million for the year.

Net asset value per unit for the year remained stable at US$0.74, the manager noted.

“Despite higher average capitalisation and discount rates, United Hampshire US Reit’s strong operating performance led to the higher portfolio valuation,” said the manager. It added that the Reit’s portfolio valuation increased 4.7 per cent year on year on a like-for-like basis to US$763.4 million as at Dec 31, 2023.

The manager noted that the Reit has no refinancing requirements until November 2026, following the completion of US$21.1 million mortgage loan refinancing this February. Some 78.8 per cent of its total loans are either fixed rate loans or floating rate loans that have been hedged using interest rate swaps.

Weighted average interest rate for the trailing 12-month period stood at 4.32 per cent, with a weighted average debt maturity of three years. Its aggregate leverage stood at 41.7 per cent, with an interest coverage ratio of 2.9 times. 

Units of United Hampshire US Reit : ODBU 0% closed Wednesday up 1.1 per cent or US$0.005 at US$0.46.