Sasseur REIT has reported a distribution per unit (DPU) of 3.153 cents for the 1HFY2024 ended June 30, 5.1% lower y-o-y.
Distributable income fell by 2.9% y-o-y to $42.7 million. In the 1HFY2024, the REIT manager retained $3.4 million, up from $2.9 million in the same period the year before.
Entrusted manager agreement (EMA) rental income climbed slightly by 0.9% y-o-y to RMB329.0 million ($60.8 million) as growth in the fixed component was more than offset by the decline in variable component.
During the period, the REIT’s fixed component income rose by 3.0% y-o-y to RMB230.5 million while the variable component saw income decline by 3.6% y-o-y to RMB98.5 million as total outlet sales fell. For the 1HFY2024, total outlet sales fell by 3.9% y-o-y to RMB2.17 billion from the higher base in the same period the year before as well as from the fall in overall consumer purchasing power. In 1HFY2023, there was pent-up demand following the relaxation of the lockdown measures and from the reopening of the Chinese economy in December 2022.
In Singapore dollar (SGD) terms, EMA rental income fell by 0.4% y-o-y to $62.3 million due to the effect of currency translation.
Excluding the impact of a change in the treatment of upfront borrowing costs which began in the 2HFY2023 as well as a change in the REIT manager’s base fee component to 20% in cash with effect from January this year, the REIT’s DPU for the 1HFY2024 would have grown by 1.7% y-o-y to 3.378 cents.
“Against the current backdrop of tepid consumer sentiment in China, Sasseur REIT has achieved stable operational performance in 1HFY2024 compared to 1HFY2023 which had seen a high base effect in sales arising from pent-up demand. Despite the external challenges, we are encouraged that Chongqing Liangjiang Outlet bucked the trend, with sales exceeding pre-Covid level in the first half of 2019 by 4.6%,” says Cecilia Tan, CEO of the manager.
“A key driver for the stable performance was our proactive asset management efforts to optimise the tenant mix at the outlets, strengthen the retail and lifestyle offerings as well as execute targeted asset enhancement works,” she adds.
As at June 30, the REIT’s portfolio occupancy stood at 97.8% while its weighted average lease expiry (WALE) stood at 2.1 years by net lettable area (NLA).
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The REIT’s aggregate leverage stood unchanged h-o-h at 25.3%, which is the lowest among the Singapore REITs (S-REITs). Its interest coverage ratio stood at 4.5 times.
“Given the near-term challenges for China’s economy, the market expects the government to introduce more policies to further stimulate economic growth in the second half of the year to achieve its 2024 GDP target,” says Vito Xu, chairman of the manager.
He adds that consumers are now increasingly prioritising value and quality, which underscores the need for businesses to offer “value-driven propositions and competitively priced products”.
“We believe these structural trends will benefit Sasseur REIT, given its outlets’ positioning as a one-stop destination for providing value-for-money bargains and lifestyle shopping experiences,” he concludes.
Unitholders will receive their distributions on Sept 26.
As at 9.06am, units in Sasseur REIT are trading 1 cent lower or 1.46% down at 67.5 cents.
