SASSEUR Real Estate Investment Trust’s (Sasseur Reit) rental income under its entrusted management agreement model for its third quarter ended September was down 2 per cent at 158.6 million yuan (S$29.3 million) from 161.9 million yuan in the previous corresponding period.
Its rental income in Singapore-dollar terms fell 3.6 per cent because of the yuan’s depreciation against the Singapore dollar, the Reit manager said on Friday (Nov 8).
The fall in rental income was largely due to a 13.2 per cent decline in its variable component income to 43.4 million yuan, from 50 million yuan in Q3 FY2023. It was in line with a 14 per cent drop in outlet sales to 958.4 million yuan, from 1.11 billion yuan in the previous corresponding period.
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 bulk of the Reit’s Q3 portfolio’s decline in outlet sales stemmed from losses from all four of its outlets, which had lower demand for fashion goods from international brands.
Its Chongqing Liangjiang outlet led the losses, with sales down 17.8 per cent at 525.4 million yuan from 639.1 million yuan in the previous corresponding period. Extreme heatwaves in Chongqing impacted shopper traffic and sales at the outlet, the Reit manager said.
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Its Hefei outlet’s sales fell 5.9 per cent to 209.3 million yuan from 222.3 million yuan. Hefei city recorded four earthquakes in September, which affected shopper traffic and sales, said the Reit manager.
The Reit’s outlet sales for the first nine months of FY2024 declined 7.2 per cent to 3.1 billion yuan as a result of a softer market environment and exceptional factors.
“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, which was 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.
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 allows it to adapt to fast-changing consumer preferences in China and provides 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.
