Since the 2 December 2024 post when United Hampshire US REIT was at 45.5 cents, the REIT is now at 48.5 cents and had given dividend of 2.05 cents. Investors who have bought it since then would have reap a 5.05 cents gain at a cost price of 45.5 cents.
That is a 11% return.
Will There be More Gains?
That is a yes. Despite the sale of 02 properties, the REIT has actively de levered. While its net property income will be lower this year, its interest expense will be lesser due to a lower leverage. Second with interest rates likely to be lowered due to the expectations of a declining US economy and incomptency of President Trump tariffs effects, I expect further fall in interest expense. Currently, the REIT's average interest rate is 5.17% with 26% of its loan tied to the floating interest rates.
Third, I expect the REIT manager to start taking units as part of its fees. So dividend should remain at 2.05 US cents per half a year and 4.1 US cents per year.
How about capital gains? Well as the market continues to appreciate the sustainability and strength in dividends provided by UtdHampshire, a re-rating will happen resulting in capital gains. My view is that this REIT deserves to be a 6% dividend yielder. Further, with escalating rents received each year, DPU will only rise from 4.1 US cents. In its hey days, this REIT was a 5.88 US cents yielder. However, I think this will be a stretch to regain its old times.
Target Price
I expect UtdHampshire US REIT to give 4.5 US cents dividend in 2026. At 6% yield. this values it at 75 US cents (it should be 64 US cents in 2024). This is a 50% upside with recurring dividends of 8% gains. It is worth buying the REIT and surpasses buying any Singapore property (for rental+ capital gains) even on leverage.
