Pure-play China S-Reits record strong 2021 growth

LISTED on SGX are 4 S-Reits and 1 property trust with pure exposure to China. These trusts have assets across sub-sectors such as retail malls, logistics and industrial, and office and business parks based in China.

All 5 trusts have recorded stronger rental income and declared increases in distributions made to unitholders for full year 2021. Common themes across their full-year earnings were resilient portfolio occupancy rates, recovery in shopper footfalls and tenant sales, and contributions from acquisitions despite recent Covid-19 resurgences.

CapitaLand China Trust (CLCT), AU8U which is diversified across 11 retail assets, 5 business parks and 4 logistics properties, reported 37.5 per cent higher FY2021 distribution per unit (DPU) and 85.2 per cent higher annual net property income (NPI) for the year. Increases were due to new contributions from its recently acquired logistics and business park portfolios, Rock Square and CapitaMall Nuohemule.

CLCT noted better occupancy rate of 96.3 per cent in FY2021, alongside higher tenant sales and shopper traffic of 16.1 per cent and 9.3 per cent respectively despite mall closures and restrictions due to sporadic Covid-19 outbreaks.

Beyond retail malls, CLCT now has a combined 21.9 per cent exposure to new economy assets through its business park and logistics portfolio which registered 7.0 per cent and 2.7 per cent in rental reversion respectively in FY2021. CLCT is also the first S-Reit to secure a loan linked to the sustainability performance of a China portfolio.

Sasseur Reit CRPU and its portfolio of 4 retail outlet malls posted 8.5 per cent growth in DPU and 10.1 per cent growth in entrusted management agreement (EMA) rental income in FY2021, despite Covid-19 disruptions.

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The Reit saw continued robust consumption trends in the cities where its outlets are located, coupled with intensive promotional efforts with tenants which drove higher sales. Its portfolio occupancy rate rose to 94.5 per cent in Q42021 compared to 93.7 per cent in Q32021. The Reit believes that it will continue to benefit from China's domestic consumption.

EC World Reit (ECW) BWCU is a specialised logistics and e-commerce logistics Reit with 8 properties in Hangzhou and Wuhan. The Reit recorded 12.7 per cent growth in NPI and 16.9 per cent increase in DPU, largely due to the absence of one-off rebates provided to tenants in FY2020. Its portfolio has an occupancy rate of 99.2 per cent as at Dec 31, 2021 and is diversified across 3 segments: e-commerce logistics (41.8 per cent of portfolio valuation), port logistics (40.5 per cent), and specialised logistics (17.8 per cent).

On Jan 10, 2022, ECW received a formal notice in relation to the compulsory expropriation of Fu Zhuo Industrial and is entitled to receive compensation based on the expropriation valuation. The Reit does not expect the compulsory expropriation to have a material impact on its portfolio and Fu Zhuo Industrial accounts for under 1.5 per cent of its portfolio valuation and 1.6 per cent of its NPI in FY2021.

BHG Retail Reit BMGU across its 6 retail malls reported increases of 14.9 per cent in NPI and 11.3 per cent in DPU for FY2021. The Reit noted that its malls continued to see healthy leasing demands with occupancy rate at 97.0 per cent as at Dec 31, 2021 alongside healthy retention rates. The Reit will remain cautious about risks of Covid-19 resurgence and continues to refresh its malls' offerings to pursue growth opportunities.

Dasin Retail Trust CEDU has a portfolio of 7 retail malls and registered increases of 10.9 per cent in NPI and 32.5 per cent in DPU for FY2021. It maintains an occupancy rate of 93.9 per cent across a diversified tenant base with no single trade sector contributing over 25.0 per cent of its gross rental income. The trust manager also looks to source new expansion opportunities with its new strategic partner and major shareholder Sino-Ocean Capital. SGX RESEARCH

For more research and information on Singapore's Reit sector, visit sgx.com/research-education/sectors for the monthly S-Reits & Property Trusts Chartbook.

Source: SGX Research S-Reits & Property Trusts Chartbook.