United-Hampshire US REIT hopes to tap into strong investor appetite and a lucrative market for REITs in Asia with its recent public offering on the Singapore Exchange. But first, it might have to weather some COVID-19 related turbulence.
United-Hampshire (traded under the symbol OBDU) became the sixth U.S. REIT to list on the Singapore Exchange Securities Trading Limited (SGX) and the first REIT in Asia to offer a diversified portfolio of U.S.-based shopping centers and self-storage assets. Specifically, the roughly 3.2 million-square-foot portfolio includes 18 grocery-anchored shopping centers and four self-storage properties.
“For investors in Asia, the United Hampshire US REIT is providing them with the unique opportunity to gain exposure to a distinctive portfolio of both high quality, resilient and stable income-producing grocery-anchored and necessity-based properties as well as modern, climate-controlled self-storage facilities strategically located in the U.S.,” said Robert Schmitt, Chief Executive Officer, United Hampshire US REIT Management Pte. Ltd.
“As the self-storage assets are primely located in markets with accelerating population growth and higher median incomes, we feel that these assets further accentuate the attractiveness of the REIT to foreign investors,” he added.
All four of the storage properties are located in New Jersey and include:
- 73,775 square foot property in Carteret completed in March 2018;
- 80,918 square foot property in Millburn completed in October 2018;
- 80,575 square foot property in Elizabeth, which was a conversion of a former armory building that was completed in January 2020;
- 71,388 square foot property in Perth Amboy that is expected to be complete before the end of second quarter 2020.
The Singapore Exchange has become an attractive alternative for REIT IPOS in recent years as REITs been well received by investors who like the steady income and portfolio diversification that REITs offer. There also is less competition compared to the U.S. market. Currently, there are 45 SGX-listed REITs and property trusts compared to 166 publicly traded REITs in the U.S.
United-Hampshire US REIT is sponsored by the Hampshire Companies, a full service, private real estate investment firm based in Morristown, NJ, and United Overseas Bank Global Capital, the asset management subsidiary of United Overseas Bank, a leading bank in Asia.
Although it is still early days since the REIT listed on April 13th, the offering has been hampered by fallout related to COVID-19. It is currently trading below its original listing price of USD $0.80 per unit at $0.62-064, which puts its market cap at about $308 million. According to company documents, the estimated NAV for the portfolio was $599 million as of September.
Despite the COVID-19 pandemic that is weighing on global markets, the REIT management team has pointed to the recession resistant and cycle-agnostic attributes of the portfolio. As of September 2019, the REIT had reported occupancy levels for the portfolio at 95%.
“Moving forward, we will continue to look for opportunities to grow the portfolio through the acquisition of best-in-class grocery and necessity-anchored retail and strategically located self-storage assets that meet our investment criteria outlined above,” added Schmitt.
In addition, the capital raised from the offering is being used to recapitalize the existing portfolio.