Sasseur REIT has reported a distribution per unit (DPU) of 6.249 cents for the FY2023 ended Dec 31, 2023, 4.6% lower y-o-y.
Distributable income for the full year fell by 5.8% y-o-y to $83.4 million due to the stronger Singapore dollar (SGD) relative to the renminbi (RMB) as well as higher finance costs and tax expenses. The renminbi fell by 7.0% for the year against the SGD compared to the same period in 2022. Excluding the impact of foreign currency translation, the REIT’s DPU for the FY2023 would have been 4.1% higher y-o-y at 6.822 cents.
In the FY2023, the REIT’s entrusted manager agreement (EMA) income grew by 10.7% y-o-y to RMB658.5 million as both fixed and variable components rose. The REIT’s variable component, in particular, surged by 31.7% y-o-y to RMB211.0 million.
In SGD terms, EMA rental income, excluding straight-line adjustments, was up by 3.0% y-o-y at $124.9 million.
DPU for the 4QFY2023 rose by 8.7% y-o-y to 1.415 cents as distributable income rose by 3.6% y-o-y to $20.6 million.
The higher DPU and distributable income was thanks to the higher EMA income, which grew by 21.1% y-o-y to RMB170.6 million. The higher EMA income was mainly thanks to an 81.7% y-o-y surge in the variable component at RMB58.7 million. The higher variable component, in turn, came on the back of higher portfolio outlet sales, which grew by 84.6% y-o-y during the quarter.
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In SGD terms, 4QFY2023 EMA rental income, excluding straight-line adjustments, rose by 18.4% y-o-y to $32.0 million.
As at Dec 31, 2023, portfolio occupancy stood at 97.6% while weighted average lease expiry (WALE) stood at 2.1 years by net lettable area (NLA).
The REIT’s aggregate leverage stood at 25.3% during the same period, which is the lowest among the Singapore REITs (S-REITs).
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“We are very encouraged by the strong growth in Sasseur REIT’s outlet sales in 2023, with Chongqing Liangjiang Outlet’s sales setting a new high and exceeding pre-Covid level in FY2019 by 8.5%. The strong sales attested to the robustness and resilience of the REIT’s outlet business, amidst economic uncertainties in China, particularly in the second half of the year. The valuation of the REIT’s portfolio has stayed relatively unchanged as at end-2023 from a year ago, reflecting the strong underlying fundamentals of the outlets,” says Cecilia Tan, CEO of the manager.
“On the asset management front, we continued to fortify the REIT’s resilience by sharpening the outlets’ positioning through a series of successful asset enhancement initiatives (AEI) in the past year, and by further strengthening our leasing efforts. Looking ahead, we will continue to curate more AEI opportunities to further enhance the assets’ values,” she adds.
In addition, Tan reveals that the REIT is currently actively seeking new funding sources such as a medium-term note programme and sustainability-linked loans as the REIT boosts its efforts to pursue inorganic growth opportunities this year.
Looking ahead, chairman of the manager, Vito Xu, says that the long-term outlook for China’s outlet industry remains “bright” with consumer dynamics shifting towards a “consumption downgrade” with greater sensitivity to price and value as seen in the outlet industry’s strong sales performance in 2023.
According to international consultancy firm, McKinsey, by 2025, outlets’ sales in China could reach as much as RMB390 billion, 86% higher than the level seen in 2022, he says.
As at Dec 31, 2023, cash and cash equivalents stood at $131.2 million.
Unitholders will receive their 4QFY2023 DPUs on March 28.
Units in Sasseur REIT closed at 68 cents on Feb 20.
