Sasseur REIT Review @ 7 April 2021

Basic Profile & Key Statistics

Sasseur REIT (Sasseur) invests in retail properties in China, it currently owns 4 outlet malls.

Performance Review

EMA rental income increased YoY by 2.5%. Whereas distributable income and DPU increased YoY by 19.7% and 18.8% due to strengthened RMB against SGD, lower interest expenses and lower tax expenses. 

Tenant sales decreased by 9.3% YoY, but increased by 12.2% QoQ. 

The AEI in Chongqing outlets showed improvement in floor area and efficiency in which 44 new brands were brought in. AEI for Hefei outlets has completed.

Related Parties Shareholding

• REIT sponsor's shareholding is high at 57.41%
• REIT manager's shareholding is moderate at 0.89%
• Directors of REIT manager's shareholding is high at 58.28%

Lease Profile

• Occupancy is moderate at 93.5%
• All income is received in RMB
• WALE is short at 1.1 years
• Highest lease expiry within 5 years is high at 80.7% which falls in this year
• Weighted average land lease expiry is short at 29.82 years

Debt Profile

• Gearing ratio is low at 27.9%
• Cost of debt is high at 3.2%
• Fixed rate debt % is low at 12.4%
• All debts are secured debts
• WADM is short at 2.24 years 
• Highest debt maturity within 5 years is high at 98.1% which falls in 2023
• Interest coverage ratio is high at 5.9 times

Diversification Profile

• Top geographical contribution is slightly low at 53.4%
• Top property contribution is high at 44.2%
• Top 5 properties contribution is high at 100%
• Top tenant contribution is low at 5.1% 
• Top 10 tenants contribution is low at 15.5% 

Key Financial Metrics

• Property yield is high at 7.6%
• Management fees over distribution is low at 10% in which unitholders receive S$ 10 for every dollar paid 
• Distribution on capital is high at 4.9%
• Distribution margin is high at 62.9%

Trends

• Uptrend - NAV per Unit, Interest Coverage Ratio
• Flat - DPU, Distribution on Capital, Distribution Margin
• Downtrend - Property Yield

Relative Valuation

• Dividend Yield - Past 4 quarters DPU @ 6.545 cents / average yield @ 8.59% = S$ 0.76, include retention, DPU would be 2.78 cents which translate into S$ 0.44
• Price/NAV - NAV @ S$ 0.92x average P/NAV @ 0.87 = S$ 0.80

Author's Opinion

Favorable	Less Favorable
High Sponsor's Shareholding	All income in RMB
High Directors of REIT Manager's Shareholding	Short WALE
Low Gearing Ratio	Concentrated Lease Expiry
High Interest Coverage Ratio	Short Weighted Average Land Lease Expiry
Low Top Tenant & Top 10 Tenants Contributions	High Cost of Debt
High Property Yield	Low Fixed Rate Debt %
Competitive Management Fees	0% Unsecured Debt
High Distribution on Capital	Short WADM
High Distribution Margin	Concentrated Debt Maturity
NAV per Unit Uptrend	High Top Property & Top 5 Properties Contributions
Interest Coverage Ratio Uptrend	Property Yield Downtrend

Sasseur performance has been improving as it benefits from the recovery of China economy. For its short lease, management explained that they intentionally opted for a shorter lease period which allows them to replace underperforming brands as well as renew leases at higher rates.

For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT-TIREMENT Patreon - Support as a Patron and get SREITs Dashboard PDF or Data Excel

REIT-TIREMENT Facebook Page - Support by liking my Facebook Page

REIT Investing Community - Facebook Group where members share and discuss REIT topic

*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.