Sasseur Reit posts 1.8% drop in Q4 DPU to S$0.019 after retention

SASSEUR Real Estate Investment Trust (Sasseur Reit) CRPU , which owns outlet malls in China, posted a distribution per unit (DPU) of S$0.019 for the 3 months ended Dec 31, 2021, down 1.8 per cent from a record high of S$0.01935 in the year-ago period.

If the Reit did not retain S$2.2 million of distributable income to fund asset enhancement initiatives and for working capital purposes, Q4 DPU would have been 7.4 per cent higher at S$0.02079, the manager said in a bourse filing on Friday (Feb 18).

Distributable income rose 8.4 per cent to S$25.3 million in the fourth quarter, from S$23.3 million the year before. The distribution will be paid on Mar 29, after the record date on Mar 18.

The Reit's rental income under its entrusted management agreements (EMA) was S$35.4 million, up 2.2 per cent from S$34.7 million the year before.

Excluding straight-line adjustments, EMA rental income was 4.1 per cent higher at S$33.6 million, from S$32.3 million posted in the year-ago period. This was mainly due to the appreciation of the yuan against the Singapore dollar, compared with Q4 2020.

The Reit's total outlet sales for Q4 2021 were lower than the year before due to Covid-19 outbreaks across other China cities which affected shopper traffic. There were also slower sales of winter clothing due to warmer-than-usual weather in China, the manager noted.

That being said, the impact on Q4 2021 EMA rental income (excluding straight-line adjustments) was cushioned by the fixed component of EMA's rental income, resulting in a marginal decline when compared with Q4 2020.

Sasseur Reit receives its rental income (called EMA resultant rent) under an EMA model which includes a fixed rent component with a 3 per cent annual escalation rate as well as a variable component that is pegged to tenant sales at the Reit's portfolio properties. This model cushions unitholders from excessive fluctuations in sales.

For the full year ended Dec 31, 2021, Sasseur Reit's DPU was S$0.07104, up 8.5 per cent from S$0.06545 posted in the year-ago period. Distributable income stood at S$93.9 million, up 19.3 per cent from the S$78.7 million reported in the year-ago period.

The strengthening of the yuan, coupled with an increase in valuation for the Reit's 4 properties, had lifted its net asset value per unit by 8.2 per cent year on year to S$0.9894 as at Dec 31, 2021.

Meanwhile, EMA rental income was 7.7 per cent higher year on year at S$134.9 million. Excluding straight-line adjustments, EMA rental income was 10.1 per cent higher at S$127.5 million.

In yuan terms, the Reit saw total outlet sales for FY2021 rise 12.3 per cent to 1.16 billion yuan (S$246 million). It continued to see "robust consumption trends" in the cities where its outlets are located. This, coupled with intensive promotional efforts with tenants, led to higher sales, the manager added.

Sasseur Reit's gearing level dropped to 26.1 per cent as at Dec 31, 2021, compared with 27.9 per cent the previous year. Its interest coverage ratio improved to 5.1 times as at end-December 2021, compared with 4 times in the year-ago period.

"These reflect the strong fundamentals of the portfolio as well as prudent capital management, with an expanded debt headroom to pursue potential acquisition opportunities," the manager said.

Sasseur Reit units closed 2.4 per cent or S$0.02 higher at S$0.85 on Friday.