SINGAPORE (May 14): The manager of Sasseur Real Estate Investment Trust (Sasseur REIT) has declared a distribution per unit (DPU) of 1.334 cents for the 1Q20 ended March.
This quarter’s DPU, which fell 19.4% y-o-y, represents 100% of the total distributable income of $16.0 million, which fell 18.7% y-o-y.
Total outlet sales for 1Q20 fell 55.7% to RMB 534.5 million (S$106.8 million), due to the operational disruptions and temporary closures arising from the Covid-19 pandemic.
Entrusted Management Agreements (EMA) rental income fell 17.1% y-o-y to RMB 127.2 million (S$25.4 million) supported by the fixed component income of RMB 102.4 million. Under the EMA model, the fixed component income comprises a majority of the overall rental income, which helps provides stability to the EMA Rental Income despite the temporary closures.
Portfolio occupancy rate for 1Q20 dipped to 94.8% from 96.0% in 4Q19 due to lower occupancies at its Bishan and Hefei outlets.
Sasseur REIT’s balance sheet remains robust with gearing at 28.5% and healthy interest coverage ratio of 4.7 times. The recent relaxation of the gearing limit for Singapore Exchange-listed REITs – from 45% to 50% – provides Sasseur REIT with higher debt headroom and capital management flexibility to pursue growth through yield-accretive acquisitions of new assets.
The manager says it plans to enhance several of its assets during 2Q20, including repositioning its Chongqing Outlets as a lifestyle and shopping destination for both local consumers and tourists from other parts of China. Block B of Hefei Outlets will be repositioned into a sports themed shopping complex to increase shopper traffic between Blocks A and B.
As Sasseur REIT’s China-based assets were affected by the Covid-19 outbreak earlier than other S-REITs, the team’s efforts to drive marketing, online engagement and event organisation have helped to generate and retain customer interest.
In its outlook, the manager notes that China is also among the first countries to begin to recover and restart its economy since April 2020. Sasseur REIT is thus in a position to recover its performance from 2Q 2020 onwards.
“1Q 2020 has turned in a respectable performance despite the temporary closure period which resulted in malls suspending operations for up to seven weeks. We are very heartened to see an encouraging return of shoppers during our special reopening and the recent Spring Sales events,” says Vito Xu, chairman of the manager.
“The retail outlet industry is counter-cyclical, and hence continues to be more resilient against economic downturns. We look forward to further recovery of the domestic economy and a stronger performance for Sasseur REIT in the coming quarters,” he adds.
“Rental income in 1Q 2020 has been less impacted by the COVID-19 disruptions compared to other malls and REITs due to our Entrusted Management Agreement (“EMA”) rental income model,” says Anthony Ang, CEO of the manager.
“Supported by a strong team organising special events, our sales are recovering steadily and our VIP member base has increased despite the challenges brought on by COVID-19 outbreak. Going forward we will continue to maintain customer engagement and increase sales, through our online sales and social media platforms, as well as at our malls through multiple promotional events in the coming months,” he adds.
Units in Sasseur REIT closed flat at 72 cents on Wednesday prior to the announcement.
