United Hampshire REIT 3Q Update- Loan Refinancing and Higher Distributable Income with 33% upside

 UtdHampshire US REIT posted two updates in recent months. Below are a key summary:

• Refinanced A New Loan Facility which ensures no refinancing risk until 2029
• Distributable income for 3Q2025 was 15.5% higher than last year's 
• Acquisition of Dover Marketplace in Aug 2025 and 5,000 sq ft in Florida Blue Expansion will increase distributable income

DPU Set to Rise

In 1H2025, DPU was at 2.09 US cents. Factoring in the acquisition in August 2025, distributable income was US$7 million (1.17 US cents). If we put it on a half year basis, it is likely Utd Hampshire US REIT DPU will have 2.35 US cents.

The second positive is SOFR rate is now reducing for its tied to the US Fed interest rates which is reducing. This means the REIT will be reporting higher earnings and higher cashflow. However, my view the REIT manager will likely reduce its payout ratio from 96% down to 90%. Hence, DPU will remain at 2.35 US cents on a half yearly basis for a few financial 6-month period. This equates to 4.7 US cents in annual dividend

I personally expect Utd Hampshire US REIT to maintain dividend at this number even with declining US interest rates. On a 51 US cents share price, and annual dividend of 4.7 US cents, the share price is a 9.2% dividend yielder

This is rather generous, and it will not be unreasonable to expect a yield compression to 7% after market realizes the resilience of its dividend mainly because of its contractual 3+3+3 leases and tenants who are grocers and banks. Target price is 68 US cents

Refinancing Risk Deferred Until 2029

The REIT has secured a new loan facility which covers the refinancing of the future Upland Mortgage. The new loan deal is tied to SOFR rate again (current SOFR =3.92%). Based on the effective interest rate Utd Hampshire US REIT pays, previously Utd Hampshire US REIT's loan facility was on a SOFR + 1.5% margin. New loan deal should be the same. 

With a long way to go before the next refinancing, investors can be rest assured the REIT can continuously give out dividend and at 39% leverage ratio, this REIT is geared in a comfortable range. The REIT manager has an easy job. At such gearing, I feel no further acquisition should be done.

Portraying the REIT as a conservatively geared entity with 9% dividend yield should be the message it is drumming to the investing community. At 51 US cents, it is a good purchase with a much higher upside.