Sasseur REIT's rent income down 17.1% to $25.46m

Combined sales of its outlet mall in China dropped 55.7%.

Sasseur REIT saw its entrusted management agreement (EMA) rental income crash 17.1% YoY to $25.46m (RMB127.2m) in Q1 from $30.73m (RMB153.5m) in 2019 as four of its outlet malls in China were impacted by operational disruptions and temporary closures.

The trust’s four outlet malls in China generated combined sales of $107m (RMB534.5m) in Q1 2020, which is a 55.7% drop than in Q1 2019.

Also read: Sasseur REIT malls re-open with 129% surge in sales

The decline was offset by the fixed component income of $20.5m (RMB102.4m). Sasseur explains that under the EMA model, the fixed component income comprises a majority of the overall rental income, thereby providing stability to the rental income despite the temporary closure period. The fixed component income has a built-in annual escalation of 3%.

Distribution per unit (DPU) for the quarter is 1.33 cents, representing 100% of the total distributable income of $16m.

Overall portfolio occupancy in Q1 dipped to 94.8% from 96% in Q4 2019 due to lower occupancy at the Bishan and Hefei outlets. Total VIP members of the four malls reached 1.66 million at the end of the quarter, 4.8% higher than 1.58 million at end-2019.

Sasseur REIT’s balance sheet is gearing at 28.5% and has an interest coverage ratio of 4.7 times. The recent relaxation of the gearing limit for SGX-listed REITs from 45% to 50% provided Sasseur REIT with higher debt headroom and capital management flexibility, the firm said.

For Q2 2020, Sasseur REIT aims to undertake asset enhancement initiatives. including repositioning Chongqing Outlets as a lifestyle and shopping destination for both local consumers and tourists from other parts of China. Block B of Hefei Outlets will be turned into a sports themed shopping complex, with space maximisation and conversion of pedestrian walkway to increase shopper traffic between Blocks A and B.