Capital management of Chinese S-REITs garners scrutiny

Goola Warden
Goola Warden4/13/2022 12:30 PM GMT+08  • 8 min read
Capital management of Chinese S-REITs garners scrutiny
S-REITs with Chinese assets have eased this year as they negotiate debt expiries. Should they stagger debt expiries?
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REITs with Chinese assets (Chinese S-REITs) listed in Singapore have attracted a lot of attention with their recent announcements, but unfortunately, not the right kind. Instead of buying interest, Chinese S-REITs have experienced selling, and are trading at significant discounts to their net asset values (NAVs) and at relatively higher yields than their Singapore peers. Yet, in general, the Chinese S-REITs’ distribution per unit (DPU) has either risen or stayed resilient.

REITs EC World REIT (ECW REIT), Sasseur REIT, BHG Retail REIT as well as business trust Dasin Retail Trust have one thing in common, in addition to owning assets in China. Slide 17 of Sasseur REIT’s results presentation, held on Feb 18, illustrates the problem. Sasseur REIT has three tranches of loans, the equivalent of $278 million onshore loan, and two offshore loans of $214 million and US$20 million. All three tranches mature in March 2023. Similarly, most of ECW REIT’s debt matures at more or less the same time. All of BHG Retail REIT’s debt matured on March 18.

During its results briefing, Cecilia Tan, CEO of Sasseur REIT’s manager, says: “Refinancing is well underway.” The ideal outcome would be a refinancing, and an acquisition, most probably, the sponsor’s outlet mall in Xi’an, which she says “is quite stabilised and growing. There is a good possibility of doing accretive deals at the right price and with the capital market at the right [level]”.

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