Sasseur REIT Review @ 22 May 2023

Basic Profile & Key Statistics

• Main Sector(s): Retail
• Country(s) with Assets: China
• No. of Properties (exclude development/associate/fund): 4

Key Indicators

Performance Highlight

EMA rental income in RMB increased YoY, however, in terms of SGD, both EMA rental income and distributable income declined YoY due to a weaker exchange of RMB against SGD. DPU on the other hand, increased YoY due to a lower amount retained. 

Sales

Sales for all 4 outlets have improved YoY due to the re-opening of the economy. The 1Q 2023 sales has surpassed the pre-COVID 1Q 2019 level.

Asset Enhancement Initiative

Upgrading of the VIP Lounge at Chongqing Liangjiang Outlet has been completed.

Related Parties Shareholding

• REIT Sponsor's Shareholding: Above median by 20% or more
• REIT Manager's Shareholding: Above median by 20% or more
• Directors of REIT Manager's Shareholding: Above median by 20% or more

Lease Profile

• Occupancy: ± 5% from median
• Income in SGD/Major Currencies: All income is received in RMB
• WALE: Below median by 20% or more
• Highest Lease Expiry within 5 Years: Above median by 20% or more; Falls in this year
• Weighted Average Land Lease Expiry: Below median by 20% or more

Debt Profile

• Gearing Ratio: Below median by 20% or more
• Cost of Debt: Above median by 20% or more
• Fixed Rate Debt %: ± 10% from median
• Unsecured Debt %: 0%
• WADM: Above median by 20% or more
• Highest Debt Maturity within 5 Years: Above median by 20% or more; Falls in 2026
• Interest Coverage Ratio: Above median by 10% or more

Diversification Profile

• Top Geographical Contribution: ± 10% from median
• Top Property Contribution: Above median by 20% or more
• Top 5 Properties' Contribution: Above median by 20% or more
• Top Tenant Contribution: Below median by 20% or more
• Top 10 Tenants' Contribution: Below median by 20% or more

Key Financial Metrics

• Property Yield: Above median by 20% or more
• Management Fees over Distributable Operating Income: Below median by 20% or more; $9.26 distribution for every dollar paid 
• Distributable Operating Income on Capital: Above median by 20% or more
• Distributable Operating Income Margin: Above median by 20% or more
• Operating Distribution Proportion: ± 5% from median

DPU Breakdown

• TTM DPU Breakdown:
• 89.4% from Operation
• 10.6% from Fees Payable/Paid in Units
• TTM DPU = 92.4% of Distributable Income

Trends

• Uptrend: NAV per Unit, Interest Coverage Ratio, Operating Distributable Income on Capital, Operating Distributable Income Margin
• Flat: DPU from Operation, Occupancy
• Downtrend: Property Yield

*The interest coverage ratio for the periods 1Q 2021 and before is estimated to reflect a closer figure in accordance with the Property Funds Appendix of the Code on Collective Investment Schemes.

Relative Valuation

• P/NAV: Average for 1y, 3y & 5y
• Dividend Yield: Average for 1y, 3y & 5y

Author's Opinion

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

The performance has improved significantly compared to the previous quarter after the opening of the economy. Notably, there is a sharp increase of 100 basis points in the average cost of debt, rising from 4.9% in the previous quarter to 5.9% in the current one. However, there is no debt refinancing is required this year and 77.2% of borrowing is pegged/hedged to a stable/fixed rate. Going forward, the REIT is expected to continue benefiting from the re-opening.

For more information, check out:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and details of Singapore REIT

REIT Review - List of previous REIT review posts

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my findings and should not be considered professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decisions.