Sasseur Reit Q3 rental income falls 2% to 158.6 million yuan

RENTAL income under the entrusted management agreement model of (Sasseur Reit) was down 2 per cent to 158.6 million yuan (S$29.3 million) for its third quarter ended September, from 161.9 million yuan in the previous corresponding period. 

In Singapore-dollar terms, its rental income fell 3.6 per cent because of the yuan’s depreciation against the Singapore dollar, the Reit manager said on Friday (Nov 8). 

Lower rental income was driven by a 13.2 per cent decline in its variable component income to 43.4 million yuan from 50 million yuan in Q3 FY2023, in line with outlet sales of its mall properties falling 14 per cent on the year to 958.4 million yuan from 1.11 billion yuan. 

This was partially offset by a 3 per cent rise in fixed component income to 115.2 million yuan from 111.9 million yuan. 

The Reit’s portfolio had lower outlet sales due to lower demand for fashion goods from international brands across its four mall outlets. 

The Chongqing Liangjiang outlet led the decline in sales, with sales down 17.8 per cent at 525.4 million yuan from 639.1 million yuan in the previous corresponding period.

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Extreme heatwaves in the Sichuan city lowered shopper traffic and sales at the outlet, the Reit manager said. 

Sales at its Hefei outlet fell 5.9 per cent to 209.3 million yuan from 222.3 million yuan. The city suffered four earthquakes in September, which hurt shopper traffic and sales, said the Reit manager. 

The softer market environment and exceptional factors like the quakes lowered the Reit’s outlet sales for the first nine months of FY2024 by 7.2 per cent to 3.1 billion yuan. 

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“Consumers in China are exhibiting increased caution in their purchasing decisions, remaining risk-averse and price-sensitive due to a weaker labour market and slower income growth,” the Reit manager said. 

Its aggregate leverage was at 25.5 per cent as at September, lower than the Singapore Reit sector’s average of 39.1 per cent, and up slightly from 25.3 per cent as at December 2023. Its interest coverage ratio was 4.5 times, compared with 4.3 times as at December last year. 

Weighted average cost of debt per year stood at 5.3 per cent as at September 2024, down from 6.6 per cent as at December 2023. In terms of debt maturities, the Reit had an average debt maturity of 2.1 years as at September 2024. 

Portfolio occupancy for Q3 FY2024 was 98 per cent, which marked a new record high, said the Reit manager. 

Weighted average lease expiry was 2.2 years by net lettable area and 1.2 years by gross revenue, as the manager said it uses deliberate short leases to “optimise tenant mix”. It said this strategy enables it to adapt to fast-changing consumer preferences in China and gives it the flexibility to replace non-performing tenants with new successful brands.

Units of the Reit closed down 2.2 per cent or S$0.015 at S$0.68 on Thursday.