Sasseur REIT Review @ 30 November 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 has increased due to the strengthening of RMB against SGD. Income available for distribution has increased due to the increase in EMA rental income as well as lower trust expenses, finance costs and tax expenses.

    

The AEI for Chongqing Liangjiang Outlets is expected to complete in December 2021, which converts the level 5 management office space to retail space. The AEI for Chongqing Bishan Outlets is in progress and expected to be completed in 1Q 2022.

Related Parties Shareholding

• REIT sponsor's shareholding is high at 56.527%
• REIT manager's shareholding is low at 0.938%
• Directors of REIT manager's shareholding is high at 57.918%

Lease Profile

• Occupancy is moderate at 93.7%
• All income is received in RMB
• WALE is short at 1.3 years
• Highest lease expiry within 5 years is high at 61.2% which falls in 2022\
• Weighted average land lease expiry is short at 29.07 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 1.5 years
• Highest debt maturity within 5 years is high at 98.3% which falls in 2023
• Interest coverage ratio is high at 4.8 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 5.4%
• Distribution margin is high at 65.2%

Trends

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

*The interest coverage ratio for period 1Q 2021 and before are 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; Above average for 3y & 5y
• Dividend Yield - Average for 1y and 3y; Below average for 5y

Author's Opinion

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

The EMA income has improved as compared to the previous quarter, however, sales have reduced YoY due to outbreaks of COVID cases in different cities which affected inter-city travel and lower sales of winter cloth due to warmer than usual weather. Moving forward, with the strengthening of RMB against SGD and AEI completion (targeted by December) of Chongqing Liangjiang Outlets, Sasseur performance is expected to be improved.

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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.