An interesting buy part 2 - United Hampshire US Reit

Follow up to my interesting buy part 1, here. United Hampshire Reit is also another 1 that is uncommon for me. 

United Hampshire US reit is asia’s first U.S. grocery-anchored shopping center and self-storage REIT, United Hampshire US REIT focuses on investing in a diversified portfolio of stabilised income-producing Grocery & Necessity Properties and modern, climate-controlled Self-Storage Properties located in the U.S.

This is the first time i am buying into a reit that deals with grocery tenant anchored malls and it is based in the US. I thought it should be pretty defensive since groceries are essentials as we can see from what happened the last 2 years. People carting trolleys of stuff, necessities or not , packed like a little mountain. The reit management calls this cycle agnostic which means it is not vulnerable to cyclical shifts in the economy. Even when recession hit, people still need to eat or drink right? Sounds reasonable to me.

The reit ipo at 80 US cents but currently trades at 60 US cents .  A snapshot of the financials can be seen below. Credits to Reitoracle

Trading at a discount to NAV, i like. Great yield, I like. Interest coverage ratio is high at 6.1 times which is good as well. Gearing is a little high but still lower than 40%. Market Cap is a little small.

The yield is currently at slightly above 10%! Share price has never gone above the IPO price. In fact, on the first day, it debut at 72 US cents. That’s quite unlucky in the sense that they started trading in March 2020. What happened in Apr 2020? Start of CB in Singapore and the world starting to understand that Covid 19 is not just another influenza.

When queried about the high yield, the CEO said the following and I tend to agree which lead to my purchase. If I need to put this into context of Singapore. These malls are like the sub urban malls of Singapore, like waterway point or even smaller malls like Seletar malls. These are the malls that people (at least for myself and family) go to to buy the necessities. You dont go to orchard road just to buy 1 pair of scissors.  

Credits to The Edge Singapore

As for whether or not the rising interest rate is going to negatively impact the reit's DPU, it definitely will but the impact will be cushioned by the high yield. Just imagine if the yield is reduced by 20%, it is still at 8%, what is there not to like? (assuming business fundamental remains the same and yield reduction is due to ridiculously high interest rate, just for example sake),This is my own opinion, and corroborated by what UOB Kh analyst mentioned. 

Credits to The Edge Singapore and UOB Kh. 

Ok, the more I look at it, the more I like this reit. I think I will buy more. Please DYODD.