UHREIT 3Q 2025 Operational Update: Robust Growth, Strategic Moves, and Positive Outlook

Key Highlights from the 3Q 2025 Report

• Distributable Income Surged 15.5% Year-on-Year: UHREIT posted a distributable income of US\$7.0 million in 3Q 2025, up from US\$6.0 million a year ago, marking a significant 15.5% increase. This was primarily driven by lower finance costs, reduced borrowings, and proactive capital management following divestments and partial loan repayments.
• High Occupancy and Stable Portfolio: Grocery & Necessity properties maintained a robust occupancy rate of 97%, with self-storage properties at 94.9%. Occupancy has consistently exceeded 94% since IPO, highlighting portfolio resilience.
• Well-Distributed Lease Expiry Profile: Only 0.3% of leases are due to expire in 2025, and minimal risk exists for 2026. The portfolio boasts a long WALE of 7.5 years, with 90% tenant retention and 59% of tenants providing essential services.
• Successful Capital Recycling: UHREIT executed strategic divestments, including the sale of Lowe’s and Sam’s Club properties for US\$36.5 million (17.5% above purchase price) and Albany-Supermarket for US\$23.8 million (4.2% above purchase price). Proceeds from these sales were redeployed into higher-yielding assets, such as the acquisition of Dover Marketplace for US\$16.4 million.
• Attractive Dividend Yield and Valuation: The REIT is trading at a 32% discount to NAV (US\$0.74), with a high dividend yield of 8.3%, substantially above the average of S-REITs and property trusts, and the US 10-year Treasury yield.
• Prudent Capital Management: Aggregate leverage stands at 38.9%, with no refinancing needs until November 2026. The weighted average interest rate has declined to 5.06%, reflecting proactive management in hedging and refinancing amidst lower SOFR rates.
• Resilient U.S. Market Conditions: The U.S. economy rebounded in Q2 2025, with annualized GDP growth of 3.8% and inflation cooling to 3.0%. Retail sales outpaced expectations (+5.0% y-o-y in August 2025), with grocery sales up 3.4%. The strip center and self-storage sectors have benefitted from structural shifts, with property values up 27% and 34% respectively since June 2020.
• Technological Integration: Major anchor tenants are innovating, with ShopRite introducing AI-powered smart carts and Walmart partnering with OpenAI to enable shopping via ChatGPT, signifying ongoing transformation in retail operations.
• Portfolio Quality and Geographic Diversification: UHREIT manages 20 grocery & necessity properties and 2 self-storage assets, totaling 3.6 million sq ft across 8 states, with US\$751 million in AUM.
• Recognition and Governance: The REIT was awarded several accolades, including The Edge Singapore’s Centurion Club Awards (REITs sector), Gold Winner at the Hermes Creative Awards, and inclusion in SGX Fast Track and multiple indices. Governance rankings have improved for three consecutive years.

Potential Price-Sensitive Factors and Shareholder Notes

• Higher Distributable Income and Reduced Finance Costs: The substantial increase in distributable income is directly positive for shareholders, supporting higher dividends and potentially driving share price appreciation.
• Strategic Divestments and Acquisitions: Divestments above purchase price and redeployment into higher-yielding assets demonstrate management’s ability to extract value and enhance returns, which may positively impact NAV and investor sentiment.
• Discount to NAV and Superior Yield: Trading at a 32% discount to NAV, coupled with an 8.3% yield, positions UHREIT as an attractive investment relative to peers and fixed income alternatives, potentially spurring investor interest.
• Refinancing and Interest Rate Sensitivity: No refinancing requirements until late 2026, and no swaps maturing until December 2026, mitigate near-term interest rate risk, supporting stable future distributions.
• Market Resilience and Tenant Strength: Anchor tenants such as Walmart, Publix, BJ’s Wholesale Club, and Dick’s Sporting Goods reported healthy sales growth, which underpins rental income stability and portfolio defensiveness.
• Technology and Omnichannel Transformation: Integration of AI and digital solutions by key tenants may drive future foot traffic and sales, indirectly benefiting rental growth and asset values.
• Continued Portfolio Optimization: Management’s track record in capital recycling, asset enhancement, and accretive acquisitions signals ongoing growth potential, which may be price-moving for the units.

Summary of Strategic Moves and Outlook

UHREIT’s 3Q 2025 results underscore the REIT’s operational strength, prudent management, and growth orientation. The combination of robust distributable income growth, successful capital recycling, high occupancy, defensive tenant base, and attractive valuation metrics presents a compelling investment case. With proactive refinancing and hedging, as well as strong portfolio fundamentals supported by leading grocery and necessity retailers, UHREIT is well-positioned to deliver sustainable returns.

Investors should note the ongoing transformation in retail, with technology investments by anchor tenants likely to support future growth. Furthermore, the REIT’s consistent governance improvements and recognition reinforce confidence in its management practices.

With no immediate refinancing risk, rising tenant sales, and a discount to NAV, UHREIT offers both income and potential for capital appreciation, and the latest operational update may act as a catalyst for share price movement.

Disclaimer

This article is for informational purposes only and does not constitute investment advice, offer, or solicitation. Investors should undertake independent due diligence and consult professional advisors before making any investment decisions. Past performance is not indicative of future results. The information herein is based on the latest UHREIT 3Q 2025 operational update and may be subject to change.

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