Dividend Collected (February 2020) and United Hampshire US REIT

Top Dividend Contribution (Last 12 Months)

Dividend Collected 2020

Dividend collected for the month of February 2020: $1.50K

• FRASERS PROPERTY
• F & N
• MAPLETREE COM TR
• THAIBEV
• FRASERS CPT TR
• ASPIALTREA200828

Dividend (YTD): $2.27K

Average Monthly Dividend (YTD): $1.13K

Total Dividend Collected to Date: $94.11K

Dividend by Month (Since Inception)

It has been a volatile week with STI breaking the support of 3000 points. The Fed did an emergency rate cut of 50 basis points to calm the market. Although the measure temporary lifted the market, especially REITs, it did not last long. It is very tempting to enter the market now, but I still feel that the market will be going downtrend over the next few months due to the impact of Covid-19 on the economy. Don't be a hero and rush to catch the falling knives. It will be a guess of when the vaccine will be out and only then would the market possibly turn around. I will be staying on the sideline at the moment and monitor how the Covid-19 situation evolves. 

UNITED HAMPSHIRE US REIT IPO REVIEW

·        Offering Price: US$0.80 per Unit/ S$1.12 per Unit

·        Public Offer: 7,500,000 Units

·        22 Assets
o   21 out of 22 assets being freehold properties

o   18 grocery & necessity properties

o   4 self-storage properties

·        8.4 years WALE

·        95.2% occupancy

·        Distribution Yield

o   Forecast FP2020: 7.4%

o   Projection PY2021: 7.6%

o   Semi-annual basis in Singapore dollars

·        Aggregate Leverage: 37.0%

·        Closing for the Public Offer: 10 March 2020 at 12.00 noon

The United Hampshire US REIT initially caught my attention as it is package as a REIT which is in the recession resistant and cycle-agnostic sectors with stable and sustainable cash flows. The sponsors, UOB Global Capital and Hampshire Companies, are reputable, and the yield is attractive. This definitely looks like a REITs for a typical income investor.

But after reading other blogs and the prospectus, it came to my attention that it is not that simple. The REIT has bundled 2 self-storage properties which are just completed or in development, and there are complex income top-up agreements for these properties using the proceeds from the IPO. These add uncertainty and complexity to the whole REIT and should no longer be viewed as defensive REIT with stable income.

The public offer is very small and most of the units will go to the private placement and the cornerstone investor. So retail investors are not their main target. Given the current market outlook and many prices coming down, I do not think I have to take the risk in subscribing this IPO as there will be better options out there. The forex rate is also not helping as it price on the higher end for USD. I will give the IPO a miss. 

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