SINGAPORE (Dec 24): The Chinese retail real investment trusts have had a challenging 2018. CapitaLand Retail China Trust, which started the year at $1.62, was trading at $1.38 as at Dec 17. Sasseur REIT, which was listed earlier this year at an IPO price of 80.5 cents, is down 18% to 66 cents. Interestingly, BHG Retail REIT, which had been underwater compared with its IPO price of 80 cents in 2015, rebounded after the announcement of an acquisition.

BHG Retail REIT is acquiring Hefei Changjiangxilu Mall for the equivalent of $65.7 million (excluding expenses and fees). The agreed value implies a FY2017 net property income yield of 5.2%, which is higher than the 5% NPI yield of its Hefei Mengchenglu Mall. Since BHG Retail REIT’s gearing was 32.7% as at Sept 30, 2018, the acquisition is fully debt-funded. According to an announcement, the acquisition is accretive. The pro forma distribution for 1HFY2018 would rise to 2.75 cents from 2.74 cents. Units in BHG Retail REIT closed at 70 cents on Dec 17, up from a low of 64 cents on Nov 14. The acquisition was announced on Nov 6, giving investors time to digest the positive impact of the property on the REIT’s portfolio.

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