CFA Society Singapore
SINGAPORE (Feb 18): The manager of Sasseur REIT announced a 4Q18 DPU of 1.999 cents, 28.1% higher than forecast.
This also brings 2H18 DPU to 3.541 cents and FY18 DPU to a total of 5.128 cents.
Sasseur REIT offers investors the unique opportunity to invest in the fast-growing retail outlet mall sector in China through its initial portfolio of four quality retail outlet mall assets.
4Q18 distributable income came in at $23.6 million, 28.1% higher than forecast while EMA rental income came in 1.6% higher than forecast at $31.2 million.
Based on the Feb 18 closing unit price of $0.71, annualised distribution yield based on the total DPU was 9.4%. The books closure date is March 5.
For FY18, total outlet sales came in at RMB 3.371 billion ($675 million), 7.9% higher than forecast. Outlet sales were better than forecast as shoppers were attracted to the year-end seasonal promotional events, leading to a strong increase in 4Q sales. Portfolio occupancy rate for 4Q improved to 95.2% from 3Q of 94.4% as more tenants were signed up and tenant mix adjusted to suit consumer preferences.
Total income available for distribution was $60.5 million for FY18 which was $6.8 million or 12.6% above forecast. With a DPU of 5.128 cents, annualised distribution yield was 8.4% based on IPO listing price of $0.80.
Total gross borrowings was $512.6 million, comprising $387.6 million onshore loans and S$125.0 million offshore loan. The aggregate leverage was 29.0% and overall weighted average cost of borrowings for FY 2018 was 5.4%, with an interest cover of 4.1 times.
Net current assets as at Dec 31 2018 was $71.1 million, representing a ratio of 1.5 times.
Sasseur Asset Management says the Chinese economy will be weighed down by lower investment and challenges on the export fronts, given the uncertainty of a trade deal with the US. Domestic consumption, however, is expected to remain healthy.
Sasseur’s business in Hefei and Kunming is expected to grow robustly while its business in Chongqing is unlikely to be impacted by the addition of 2.2 million sqm of new retail space by 2021 as none of them are for retail outlet malls.
From FY19, distribution will be switched from semi-annually to quarterly.
Units in Sasseur closed 1 cent higher at 71 cents on Monday.