The manager of Sasseur REIT CRPU has reported a distribution per unit (DPU) of 3.322 cents for the 1HFY2023 ended June 30, 2.6% lower y-o-y.
For the 2QFY2023, DPU fell by 7.2% y-o-y to 1.473 cents.
The lower DPUs were due to the stronger Singapore dollar (SGD) against the renminbi as well as higher finance costs for the period.
On a like-for-like currency basis, 1HFY2023 DPU would have been higher by 8.1% y-o-y at 3.687 cents.
During the 1HFY2023, the REIT’s entrusted manager agreement (EMA) income fell by 3.6% y-o-y to $63.5 million.
EMA rental income excluding straight-line adjustments fell by 1.4% y-o-y to $62.6 million.
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In renminbi terms, EMA income rose by 8.0% y-o-y to RMB326.0 million ($61.2 million). The REIT’s fixed component rose by 3.0% y-o-y to RMB223.8 million while variable component rose by 20.8% y-o-y to RMB102.2 million due to the portfolio’s strong outlet sales performance in the 1HFY2023.
Total outlet sales rose by 20.5% y-o-y to RMB2.25 billion, reaching an all-time high since the REIT’s listing.
Distributable income fell by 2.4% y-o-y to $43.9 million.
During the 1HFY2023, the REIT retained $2.9 million.
As at June 30, portfolio occupancy stood at 97.2%, another record-high. Weighted average lease expiry (WALE) stood at 2.1 years by net lettable area (NLA).
“Sasseur REIT’s operational performance in the first half of 2023 exceeded our expectations. We are very pleased that the portfolio’s outlet sales reached an all-time high, even surpassing pre-Covid level[s] in the first half of 2019 with Chongqing Liangjiang Outlet’s 1HFY2023 sales also setting a new record high. This once again demonstrates the continuing resilience of our outlet business against the background of a mixed recovery in China’s economic growth, particularly in the second quarter of this year,” says Cecilia Tan, CEO of the manager.
“On the asset management front, we continue to be proactive in curating diverse, new and experiential brand concepts for Sasseur REIT’s outlets to enhance shoppers’ experiences,” she adds. The REIT manager undertook an asset enhancement initiative (AEI) in its Kunming outlet in July adding new food and beverage (F&B) options among others.
“The AEI will position the outlet for steadily improving domestic tourism in Kunming city as well as tapping on the city’s recovery in F&B sales seen in 1HFY2023,” says Tan.
She adds that the manager expects outlet sales in the 2HFY2023 to be stronger than its 1HFY2023’s performance, based on historical data.
“We are seeing a more pronounced shift in Chinese consumers’ preferences towards high-quality and lower-cost products during economic uncertainty. The outlet industry in China has shown counter-cyclical characteristics in the past and displayed greater resilience under weak or uncertain economic growth conditions,” says Vito Xu, chairman of the manager.
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“We are confident that consumer spending at outlets in China will remain robust in the second half of this year. This bodes well for Sasseur REIT’s outlets in providing value-for-money bargains for consumers while positioning the outlets as ‘go-to’ shopping destinations with uniquely curated lifestyle and experiential components at the same time,” he adds.
“Given the Chinese government’s recently intensified measures to boost economic growth and domestic consumption, we remain cautiously optimistic on the country’s economic outlook for the rest of the year,” he continues.
As at June 30, cash and cash equivalents stood at $86.1 million.
Aggregate leverage stood at 26.2%. The REIT’s interest coverage ratio stood at 4.0x.
Unitholders will receive their DPUs on Sept 26.
Units in Sasseur REIT closed flat at 72.5 cents on Aug 10.
