The manager of Sasseur REIT has declared a distribution per unit (DPU) of 1.512 cents for 2Q20 ended June, 6% down from the 1.608 cents posted in 2Q19.

This brings the REIT’s 1H20 DPU to 2.846 cents, some 12% lower than the DPU of 3.264 cents in 1H19.

Quarter-on-quarter, the REIT’s DPU rose 13.3% from 1Q20’s performance of 1.334 cents, due to the severe negative impact from the Covid-19 pandemic that was reflected in the economic conditions and consumer sentiment in 1Q20.

In the release of its results on August 14, the manager says the REIT’s portfolio of four outlet malls in China delivered higher sales, rental income, and distributable income for 2Q20, showing positive signs that its business recovery is “firmly underway”.

Sasseur REIT’s distributable income for 2Q20 stood at $18.2 million, down 5.2% y-o-y, and up 13.6% q-o-q, mainly attributable to lower sales, one-off reversal of trust expenses in 2Q19. The decrease was partially offset by lower finance costs and lower tax expense.

For the quarter, EMA rental income fell 3.5% y-o-y to RMB140.9 million ($27.8 million).

In SGD terms, EMA rental income (excluding straight-line adjustments) for 2Q20 was lower by 4.1% y-o-y at $28.0 million, partly due to the weakening of Renminbi against Singapore Dollar by 0.6% in the same quarter compared to 2Q 2019.

Total outlet sales fell 18.6% y-o-y to RMB191 million due to a slowdown in retail sales.

Finance costs for 2Q20 fell 7.5% y-o-y to $6.6 million largely due to two repayments of 1% of initial principal on RMB2.0 billion onshore term loans in September 2019 and March 2020 of $3.9 million each.

As at end June, overall portfolio occupancy stood at 93.6%, 0.8 percentage points lower than 1Q20, with a weighted average lease expiry (WALE) of 2.7 years.

The lower occupancy rate was due to lowered occupancy rates of the REIT’s Bishan outlets as a result of the impact of the virus.

Looking forward, as the situation in China continues to improve, the manager of the REIT believes that the rest of 2020 will deliver “stronger performances” and that sales will return to pre-pandemic levels.

“We are extremely pleased to see that business has recovered significantly since four of our outlets reopened in March 2020. As a leading outlet operator, we have remained resilient and mitigated the overall impact of the pandemic on our business,” says Vito Xu, chairman of the manager.

“As a result of China’s tight control measures, efforts to contain the spread of the virus has been very successful, enabling businesses to recover more quickly and people to return to their normal routines. Outlet business is counter-cyclical and actually benefit from difficult times when budgets are tighter, as people seek better value-for-money bargains,” he adds.

Units in Sasseur REIT closed 1 cent higher, or 1.3% up, at 77 cents on August 13.