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Monday, May 17, 2021

Sasseur REIT Review @ 17 May 2021

Basic Profile & Key Statistics

Sasseur REIT (Sasseur) is a retail REIT that invests owns 4 outlet malls in China.

Performance Highlight

EMA rental income, distributable income and DPU increased YoY by 27.8%, 47.8% and 31.9% respectively. The huge difference is due to the temporary closure of its mall from the end of Jan to mid March 2020 as a precautionary measure to prevent the spread of COVID-19 virus in China.
Outlet sales have increased 112.6% YoY as compared to 1Q 2020. The more realistic comparison would be compared with 1Q 2019 and 4Q 2020 which are 5.8% and 8.8% lower respectively.

Related Parties Shareholding

  • REIT sponsor's shareholding is high at 56.76%
  • REIT manager's shareholding is low at 0.69%
  • Directors of REIT manager's shareholding is high at 57.75%

Lease Profile

  • Occupancy is moderate at 93.5%
  • All income in RMB
  • WALE is short at 1 year
  • Highest lease expiry within 5 years is high at 69.2% which falls in this year
  • Weighted average land lease expiry is short at 29.57 years

Debt Profile

  • Gearing ratio is low at 27.6%
  • Cost of debt is high at 3.3%
  • Fixed rate debt % is high at 91.4%
  • All debts are secured debts
  • WADM is short at 2 years
  • Highest debt maturity within 5 years is high at 98.2% which falls in 2023
  • Interest coverage ratio is high at 7.5 times

Diversification Profile

  • Top geographical contribution is moderate 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 8% 
  • Management fees over distribution is high at 10.3% in which unitholders receive S$ 9.71 for every dollar paid 
  • Distribution on capital is high at 5.2%
  • Distribution margin is high at 63.8%

Trends

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

Relative Valuation

  • Dividend Yield - Latest 4 quarters DPU @ 6.97 cents / average yield @ 8.57% = S$ 0.815
  • Price/NAV - NAV @ S$ 0.92 x average P/NAV @ 0.87= S$ 0.80


Author's Opinion

 Favorable Less Favorable
High REIT Sponsor's Shareholding Low REIT Manager's Shareholding
High Directors of REIT Manager's ShareholdingAll income in RMB
Low Gearing RatioShort WALE
High Fixed Rate Debt %Concentrated Lease Expiry
High Interest Coverage RatioShort Weighted Average Land Lease Expiry
Low Top Tenant & Top 10 Tenants ContributionsHigh Cost of Debt
High Property Yield0% Unsecured Debt
Competitive Management FeesShort WADM
High Distribution on CapitalConcentrated Debt Maturity
High Distribution MarginHigh Top Property & Top 5 Properties Contributions
NAV per Unit UptrendProperty Yield Downtrend
Interest Coverage Ratio Uptrend

Sasseur performance has improved YoY (better than pre-COVID time) without any inorganic growth through acquisition for the past 3 years of listing. Hopefully, the manager could take advantage of its low gearing and have a yield accretive acquisition soon. 


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

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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 and 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.

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