Sasseur REIT Review @ 24 February 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 and distributable income declined yoy mainly due to shortened operating hours and temporary closures of outlets arising from COVID-19 outbreak. Coupled with higher retention, DPU is significantly lower.

Sales

Due to mandated temporary closures, lockdowns and travel restrictions, sales for all 4 outlets have declined tremendously.

Distribution Breakdown

• Distributable Income Breakdown:
• 90% from Operation
• 10% from Fees Payable/Paid in Units
• Distribution = 90.8% of Distributable Income

Related Parties Shareholding

• REIT Sponsor's Shareholding: Above median for more than 20%
• REIT Manager's Shareholding: Above median for more than 20%
• Directors of REIT Manager's Shareholding: Above median for more than 20%

Lease Profile

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

Debt Profile

• Gearing Ratio: Below median for more than 20%
• Cost of Debt: Above median for more than 20%
• Fixed Rate Debt %: ± 10% from median
• Unsecured Debt %: 0%
• WADM: Below median for more than 20% (post refinancing, 3.6 years, above median for more than 20%)
• Highest Debt Maturity within 5 Years: Above median for more than 20%; Falls in 2023 (post refinancing, 45.2%, above median for more than 20%; falls in 2026)
• Interest Coverage Ratio: Above median for more than 10%

Diversification Profile

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

Key Financial Metrics

• Property Yield: Above median for more than 20%
• Management Fees over Distribution: Below median for more than 20%; $9.09 distribution for every dollar paid 
• Distribution on Capital: Above median for more than 20%
• Distribution Margin: Above median for more than 20%

Trends

• Uptrend: NAV per Unit, Interest Coverage Ratio
• Flat: DPU, Occupancy, Distribution on Capital, Distribution Margin
• 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: Above +1SD for 1y; Above average for 3y; Average for 5y
• Dividend Yield: Below average for 1y; Average for 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 (post refinancing)	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 Distribution on Capital
High Distribution Margin
NAV per Unit Uptrend
Interest Coverage Ratio Uptrend

The temporary closures of outlets and restrictions due to the COVID-19 outbreak significantly impacted the performance in 4Q 2022. Fortunately, China lifted the COVID-19 restrictions in early December 2022, and there has been a rise in activities during the Chinese New Year holiday period, with revenue from tourism, restaurants, and retail showing improvement. . Going forward, Sasseur REIT is expected to benefit from the anticipated consumption recovery in 2023. 

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.