Sasseur REIT Review @ 21 November 2023

Basic Profile & Key Statistics

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

Key Indicators

Performance Highlight

EMA rental income in RMB increased YoY, however, in terms of SGD, it has declined slightly due to a weaker exchange of RMB against SGD. DPU has declined YoY mainly due to the absence of one-off non-recurring tax refund in 3Q 2022 and higher interest expenses.

Sales

Sales for all 4 outlets have improved YoY. 

Asset Enhancement Initiative

AEI for the Kunming outlet has been completed where both Erlanggang Chongqing Hotpot and KFC have opened in 3Q. 

For the Bishan outlet, the second entrance is planned and targeted to be completed by 1Q 2024.

AEI for the Hefei outlet would be carried out for the upcoming opening of a leading supermarket. 

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

• Committed 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 2024
• 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 %: Below median by 10% or more
• WADM: ± 10% from median
• 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; $8.40 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:
• 88.4% from Operation
• 11.6% from Fees Payable/Paid in Units
• TTM DPU = 91.7% of Distributable Income

Trends

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

Relative Valuation

• Dividend Yield: Average for 1y, 3y & 5y
• P/NAV: 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
High Committed Occupancy	Short Weighted Average Land Lease Expiry
Low Gearing Ratio	High Cost of Debt
High Interest Coverage Ratio	Low 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
High Distributable Operating Income on Capital
High Distributable Operating Income Margin
Interest Coverage Ratio Uptrend

As compared to the previous quarter, distributable income has declined despite an increase in EMA rental income. However, no detail has been provided in this business update. In terms of debt, only 13% would be matured in 2024 and no refinancing requirement in 2025. With a 77% debt proportion at a fixed rate, further impact on interest increase should be minimal.

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

To support my work, check out:

Patreon - Subscribe and get exclusive content

Investing Note - Support by following my Investing Note profile

X - Support by following my X account

Facebook Page - Support by liking my Facebook Page    

Facebook Group - REIT Investing Community - Join to share and discuss REITs

Telegram Channel - Singapore REITs Post - Join to receive posts for Singapore REITs

Buy Me a Coffee - Treat me a coffee for my efforts

*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.