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Tuesday, September 07, 2021

Sasseur REIT Review @ 7 September 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 improved YoY but declined as compared to the previous quarter.

The outlet sales in 2Q 2021 improved YoY by 6.4%.

There is an ongoing AEI for Chongqing Bishan outlet, which is target to complete by December 2021.


Related Parties Shareholding

  • REIT sponsor's shareholding is high at 56.64%
  • REIT manager's shareholding is low at 0.83%
  • Directors of REIT manager's shareholding is high at 57.89%

Lease Profile

  • Occupancy is moderate at 92.5%
  • All income is received in RMB
  • WALE is short at 0.9 years
  • Highest lease expiry within 5 years is high at 63% which falls in this year
  • Weighted average land lease expiry is short at 29.32 years

Debt Profile

  • Gearing ratio is low at 27.8%
  • Cost of debt is high at 4.4%
  • Fixed rate debt % is high at 91.5%
  • All debts are secured debts
  • WADM is short at 1.7 years
  • Highest debt maturity within 5 years is high at 98.8% which falls in 2023
  • Interest coverage ratio is high at 4.5 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 low at 10.6% in which unitholders receive S$ 9.43 for every dollar paid 
  • Distribution on capital is high at 5.3%
  • Distribution margin is high at 64%

Trends

  • Uptrend - NAV per Unit, Interest Coverage Ratio
  • Slight Uptrend - DPU
  • Flat - Distribution on Capital, Distribution Margin
  • Downtrend - Property Yield
**The interest coverage ratio for period 1Q 2021 and before are estimated to reflect a more closer figure in accordance with the Property Funds Appendix of the Code on Collective Investment Schemes.

Relative Valuation

  • P/NAV - Average for 1y; Above average for 3y & 5y
  • Dividend Yield - Average for 1y; Below average for 3y and 5y

Author's Opinion

 Favorable Less Favorable
High REIT Sponsor's ShareholdingLow REIT Manager's Shareholding
High Directors of REIT Manager's Shareholding All 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 has performed better than pre-COVID time with higher EMA rental income and distributable income. However, 1H 2021 DPU drop as compared to 2H 2020 due to Sasseur retained 10% of distributable income for working capital and AEI usage, as compared to distribute out 100% of distributable income previously.

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*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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