United Hampshire US Reit says portfolio 'remains resilient' amid Covid-19 pandemic

UNITED Hampshire US Real Estate Investment Trust (United Hampshire US Reit) on Friday said its portfolio "remains resilient and well-positioned" to navigate the novel coronavirus pandemic.

This is because more than 70 per cent of its base rental income comes from tenants in businesses deemed essential, a majority of which remain open during widespread lockdowns.

The Reit's portfolio tenants consist of grocery-anchored and necessity-based retail properties, as well as self-storage facilities in the US. The properties are located in New York, New Jersey, Massachusetts, North Carolina, Florida and Maryland. 

Grocery and necessity properties refer to grocers, wholesalers, home improvement retailers and discounters in the US. These include brands such as Walmart, BJ's Wholesale Club, Lowe's and Home Depot.

Robert Schmitt, chief executive of the Reit's manager, said tenants which are necessity-based retailers remain open for business and have experienced a rise in demand for household products over the past few weeks.

In contrast to enclosed malls which have been shut down to curb the spread of the novel coronavirus, the Reit's suburban properties are open-air strip centres.

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These strip centres allow shoppers to drive to, park and complete their purchases at the stores relatively quickly while practising social distancing, Mr Schmitt added.

Meanwhile, businesses classified as non-essential in the Reit's portfolios have closed - including health clubs and off-price clothing stores, as well as some restaurants due to the prohibition of sit-down dining.

That said, the Reit is optimistic that these businesses will progressively reopen upon the lifting of the restrictions. 

Several states in the US recently issued shutdown orders, closing non-essential businesses in a bid to curb the spread of Covid-19. In general, only retail businesses considered "essential" by each applicable state government are allowed to stay open.

To ensure shopper safety, the Reit's tenants have stepped up cleaning and sanitisation activities.

In the same announcement, the Reit manager also said that over 110,000 square feet of new and extended leases were recently finalised from January to March 2020.

The Reit has also entered into interest rate swaps to hedge its interest rate exposure following the US Federal Reserve's interest rate cuts. The move allowed it to achieve an overall reduction in its average all-in effective interest rate, which will "positively impact" its cash flow for its 2020 forecast period and 2021 project year.

United Hampshire US Reit units were trading at 54 US cents as at 1.54pm on Friday, up 3.5 cents or 6.9 per cent.