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Sasseur REIT posts 7.6% higher DPU for 3Q to 1.764 cents on higher EMA rental income

Felicia Tan
Felicia Tan • 3 min read
Sasseur REIT posts 7.6% higher DPU for 3Q to 1.764 cents on higher EMA rental income
Quarter-on-quarter, DPU was up 16.7% from the 1.512 cents posted in 2QFY2020.
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The manager of Sasseur REIT has reported distribution per unit (DPU) of 1.764 cents for the 3QFY2020 ended Sept 30, up 7.6% from the 1.640 cents reported in 3QFY2019.

Quarter-on-quarter, DPU was up 16.7% from the 1.512 cents posted in 2QFY2020.

Total DPU for the 9MFY2020 came in at 4.610 cents, 6% lower y-o-y than the DPU of 4.904 cents.

The REIT’s rental income under its entrusted management agreements (EMA) in 3QFY2020 fell by 2.1% y-o-y, but was up 8.3% q-o-q to RMB152.6 million ($31.1 million).

The higher quarterly figures were due to a 30.3% higher variable rental income of RMB50.2 million compared to RMB38.5 million in 2QFY2020.

In SGD, EMA rental income was slightly lower by $0.3 million due to the appreciation of the RMB against the SGD by 1.1%.

3QFY2020 distributable income rose 8.5% y-o-y and 16.9% q-o-q to $21.2 million, mainly due to lower tax expense and interest expense, in line with the reduction of the Swap Offer Rate (SOR) for offshore loan and lower effective tax rate than corresponding periods.

As at Sept 30, the REIT’s portfolio occupancy rate remained stable at 93.1% with a weighted average lease expiry (WALE) of 2.8 years by net lettable asset (NLA). Total VIP members at the four malls increased to 1.96 million as at Sept 30, up from the 23.4% reported at the end of 2019.

The phased completion of the asset enhancement initiative (AEI) works at Chongqing outlet has shown positive initial results, says the REIT.

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In 3QFY2020, Chongqing’s actual sales were up 2.4% y-o-y partly due to the entry of new brands like Versace and Armani Exchange, and boosted by successful overnight sales events with discounts at the outlet malls.

Cash and cash equivalents as at Sept 30 stood at $177.3 million.

“We are upbeat that the retail outlet industry will strengthen as China’s economic prospects improve. The outlet sector has grown robustly as consumers continue to seek for value-for-money deals. Till date, our strong sales performance - 56.4% growth from 1Q to 2Q and 32.9% growth from 2Q to 3Q this year - has demonstrated the resilience of our outlet mall sector, which is underpinned by Sasseur group’s operational expertise, and deep knowledge of the China consumer preferences and behaviour,” says Vito Xu, chairman of the manager.

“Our customer base comprises predominantly domestic Chinese consumers, hence the global travel restriction has no impact on us. We expect the performance of Sasseur REIT’s portfolio to remain strong in the coming months. Sasseur is a role model of China’s so called “internal circulation” domestic economy,” he adds.

Units in Sasseur REIT closed flat at 78 cents on Nov 12.

Read Also: 'Buy' Sasseur REIT as buying sentiments improve in China

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