SINGAPORE (May 13): The manager of Sasseur Real Estate Investment Trust (Sasseur REIT) has declared distribution per unit (DPU) of 1.656 cents for the 1Q19 ended March, some 9.3% higher than its IPO projection of 1.515 cents.
Sasseur REIT, the owner of retail outlet malls in China, recorded distributable income of $19.7 million for 1Q19, exceeding its IPO projection of $18.0 million by 9.3%.
Entrusted Management Agreements (EMA) rental income of $30.7 million in 1Q19 was 2.4% higher than its IPO projection of $30.0 million.
The improvement was mainly attributed to the Chinese New Year promotional events across all four outlet malls, which attracted an excellent turnout of customers.
Total outlet sales of RMB 1.21 billion ($244.6 million) for 1Q19 was higher than projection by 10.1%, and 24.0% higher than 1Q18.
By comparison, growth of total retail sales of consumer goods in China was 8.3% over the same period.
Sasseur REIT says the outperformance was mainly due to its unique art-commerce business model, its employee partnership programme that was instituted in 2018, as well as seasonal sales promotions that boosted sales.
Portfolio occupancy rate for 1Q19 increased to 96.1%, from 95.2% in 4Q18, due to continued efforts to improve and optimise the tenant mix.
As at end March, cash and cash equivalents stood at $154.5 million.
The manager says Sasseur is poised to capture a larger share of the consumer goods retail market in China, with China’s growing economy and rising disposable income.
Barring any unforeseen circumstances, retail sales for Sasseur’s four outlet malls are expected to continue growing throughout FY19.
It adds that the stalled trade negotiations between US and China are unlikely to impact its outlet sales in China, which is largely fuelled by domestic consumption.
The group notes that it was the top-performing REIT on SGX for the quarter, with a total return of 25% that surpassed the average of 15.7% for the 20 best-performing S-REITs.
“Sasseur REIT is able to capture the upside from higher sales due to our EMA Rental Income model which helped to lift distributable income for 1Q19,” says Anthony Ang, CEO of the manager. “We will strive to improve the DPU for the rest of FY19 by actively managing assets through generating more loyalty-based repeat sales, improving occupancy rate for our Bishan and Kunming malls and yield-accretive acquisitions when opportunities arise.”
“We recently added shop units in Hefei to improve flexibility for asset management and optimisation of tenant mix so as to improve net income,” he adds. “More importantly, the REIT’s balance sheet remains healthy. The low gearing at 29.2% provides the REIT with ample financial capacity.”
Units of Sasseur REIT closed 0.6% lower at 78 cents on Monday.
