For more stories about where the money flows, click here for our Capital section
“BHG REIT has a defensive lease structure. About 95% of its leases are structured on the higher of fixed rents or percentage of gross turnover, allowing BHG to benefit from upside while protected by fixed rents,” note Ye. The REIT, which is based in China, also has accessibility to tap on the country’s economic fundamentals. “Over the past decade, disposable income and expenditure per capita of urban residents in China grew at CAGRs of 7.4% and 5.7% respectively. Urban retail sales grew at a CAGR of 6.5% to reach RMB29,424 billion at end-2020,” she says. “With the Covid-19 pandemic largely under control in China, y-o-y changes in monthly retail sales have turned positive again since September 2020. With China’s GDP forecast to expand 8.2% in 2021, retail sales are expected to sustain their strong growth,” she adds.
See: BHG Retail REIT's 1H DPU slashed by more than half to 0.89 cent due to Covid-19 pandemic
On M&A growth opportunities, the REIT has a ready right of first refusal (ROFR) pipeline of 11 properties in 10 cities.