UHREIT Delivers Robust 1H 2025 Results: Dividend Yield Hits 9.1%, Strategic Acquisitions and Divestments Drive Growth

Key Highlights:

• Distribution Per Unit (DPU) up 4% YoY to 2.09 US cents for 1H 2025
• Dividend yield soars to 9.1%, trading at a 39% discount to NAV
• Strong portfolio optimization: High-profile divestments and accretive acquisitions, including Dover Marketplace
• Occupancy rates remain resilient: 97.2% for Grocery & Necessity, 95.3% for Self-Storage
• Robust balance sheet: Net aggregate leverage at 36.1%, no refinancing needs until Nov 2026
• Positive U.S. macro outlook supports retail and necessity-based assets

Strong 1H 2025 Financial Results Signal Confidence

UHREIT announced a solid set of results for the first half of 2025. While gross revenue and net property income dipped 3.0% and 5.6% respectively, due to the absence of contributions from recently divested properties, the real story was the rise in distributable income by 2.4% and DPU by 4.0%. Excluding the divestments, same-store gross revenue and net property income actually grew 2.6% and 2.4% respectively, reflecting organic rental growth, successful lease commencements, and escalations.

The increase in DPU was also attributed to lower finance costs—a result of both declining interest rates and proactive debt reduction from divestment proceeds. This combination of operational resilience and financial discipline underpins management’s confidence in sustaining and potentially growing distributions going forward.

Dividend Yield and Valuation Offer Compelling Opportunity

With a 9.1% dividend yield and units trading at a 39% discount to NAV (US\$0.74 NAV vs. US\$0.455 unit price), UHREIT stands out among S-REITs and global REIT peers. Its price-to-book ratio of 0.61 signals a deep value opportunity for yield-seeking investors, especially given the stability of its U.S.-centric, necessity-based asset portfolio.

Portfolio Optimization: Capital Recycling and Growth

UHREIT’s proactive approach to portfolio management was a key highlight. The group completed several price-sensitive transactions:

• Divested Lowe’s and Sam’s Club properties within Hudson Valley Plaza for US\$36.5 million—representing a 17.5% premium to purchase price.
• Divested Albany Supermarket in New York for US\$23.8 million, a 4.2% premium over purchase price.
• Acquired Dover Marketplace (Pennsylvania) for US\$16.4 million (4.8% below independent valuation), with a ~9.7-year WALE and 96.1% occupancy, expected to boost DPU by 2.0% on a pro-forma FY2024 basis.
• Launched new developments, including a pre-leased 5,000 sq ft store for Florida Blue at St. Lucie West, further enhancing recurring income.

These moves highlight management’s ability to unlock value through strategic divestments and redeployment into higher-yielding assets, a factor that could re-rate the stock if this capital recycling momentum continues.

High-Quality, Defensive U.S. Portfolio

UHREIT’s 21-property portfolio, with 3.5 million sq ft of necessity-based retail and self-storage space, remains anchored in the affluent and populous U.S. East Coast. With WALE of 7.6 years and 58.3% of tenants classified as “essential services,” the trust enjoys both income visibility and defensive characteristics against economic uncertainty.

Leases are predominantly triple net—with tenants shouldering insurance, taxes, and maintenance—further insulating UHREIT from inflationary cost pressures. The portfolio’s long WALE, high tenant retention (90%), and minimal lease expiries in the next two years (only 0.7% in 2025) reinforce the trust’s stability.

Resilient U.S. Macro Backdrop and Sector Tailwinds

The U.S. economy rebounded in Q2 2025, with annualized GDP growth at 3.8% and inflation cooling to 2.9%. Retail sales remained robust (+5.0% YoY in August), with grocery sales up 3.4% YoY. Unemployment remained low at 4.3%, and the Federal Reserve cut rates by 125bps since September 2024, directly benefiting UHREIT’s financing costs.

Importantly, strip centers and self-storage properties outperformed other commercial real estate sectors, with property values rising 24% and 34% respectively since June 2020. Limited new supply and high occupancy in top-tier retail reinforce UHREIT’s positioning for continued growth.

Anchor Tenants and Omnichannel Advantage

Top tenants—including BJ’s Wholesale Club, Walmart, and Publix—reported healthy sales growth and increasingly leverage their physical store networks to fulfill digital orders. Over 80% of online orders for many anchor tenants are fulfilled via stores, underscoring the enduring importance of bricks-and-mortar formats in the evolving retail landscape.

Responsible Governance and Sustainability Accolades

UHREIT was recognized with the “Company of Good – 3 Hearts” award by Singapore’s National Volunteer and Philanthropy Centre, improved to 12th place in the Singapore Governance and Transparency Index, and continues to maintain a strong compliance and anti-corruption track record. Environmental initiatives include LED lighting upgrades and targeted reductions in electricity usage.

Shareholder Considerations and Price-Sensitive Information

• Accelerated capital recycling into accretive assets could drive further DPU growth and share price rerating.
• High-yield, defensive portfolio in a favourable U.S. macro environment makes UHREIT an attractive option amid global real estate volatility.
• No refinancing needs until late 2026 and reduced floating rate debt exposure provide financial stability in a shifting interest rate landscape.
• Potential for further NAV accretion if current discount to book value narrows as investor sentiment shifts.

Conclusion: Is UHREIT a Hidden Gem?

With high occupancy, a robust and growing DPU, strategic portfolio moves, and a valuation gap, UHREIT emerges as a compelling, price-sensitive story for yield-focused investors. Any acceleration in acquisitions, further rate cuts, or narrowing of its NAV discount could be significant share price catalysts in the coming quarters.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, recommendation, or an offer to buy or sell any securities. Investors should conduct their own due diligence or consult a qualified professional before making investment decisions. All information is based on publicly available data as at June/July 2025 and may be subject to change.

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