Is United Hampshire US REIT A Good Buy In 2026? [Fundamental Analysis]

In this article, we'll conduct a fundamental analysis and review of United Hampshire US REIT and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having high capital preservation ability.

Business Description

US Hampshire US REIT is a retail REIT that was listed in 2020 and owns retail properties and self-storage spaces across the United States.  

What I Like About :

• Operations have been stable since the listing (2020), and the dividend yield is very attractive, given how beaten down the counter is.

  
  

• Though unproven, the management's recent capital recycling effort has been rather successful (Figure 11)

  
  

• Properties are leased to mostly grocery and necessity service providers, which will provide higher stability in rental income. This is seen in the historical high tenant retention rate of >90% since listing.

  
  

• Leases are substantially on a Triple Net Lease basis with build-in rental escalation and no early termination rights.

What I Do Not Like About

• The properties are mostly quite aged (completed from 1970 to 1990), which may require more asset enhancement initiatives to ensure that they remain competitive with similar properties that are “newer.”

Updates From Recent Performance (FY 2025)

General Comments:

• Gross revenue (GR) and net property income (NPI) decreased by 1.7% primarily due to the absence of contributions from 3 divested properties. Excluding the impact of divestment, GR & NPI would have increased by 2.3% and 4.1% y.o.y.

  
  

• Overall cost of borrowing decreased by 16 basis points to 5.01% while the gearing ratio remained stable at 38.60%.

  
  

• DPU from operations improved by 0.87%, largely due to non-cash distribution adjustments. Unfortunately, overall operating performance did fell as highlighted on the above decrease in NPI.

Positive Headwinds:

• US consumer spending patterns continue to favor essential goods which reinforce the structural advantages of grocery anchored strip centers.

  
  

• US grocery-anchored strip center market continues to benefit from favorable supply-demand dynamics with limited new retail space under development projected at 0.3% per annum.

  
  

• FY2026 DPU is likely going to be boosted by the contributions on the full year contribution from the acquired properties.

Negative Headwinds:

• Tensions in the middle east will contribute to higher inflation print which increases the chance of an elevated interest rate environment or worst rate hikes that could sustain or worsen the cost of borrowing.  That said, given that there is no significant refinancing requirements until Feb 2028, it is unlikely that the REIT will be impacted by any adverse interest rate movement in the coming 12-18 months.

  
  

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Disclaimer:

This article is meant to be the opinion of the author

This article is for information purposes only

This article should not be seen as financial advice

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