Dasin Retail Tr (SGX: CEDU) EC World Reit (SGX: BWCU) Sasseur Reit (SGX: CRPU) CapLand China T (SGX: AU8U) BHG Retail REIT
Sasseur REIT is the first outlet mall REIT to be listed in SGX, with an Initial Portfolio comprising four retail outlet malls located in the China, offering investors the opportunity to invest in the country's fast-growing retail outlet mall sector.
When we buy REIT, many people only look at the Gearing Ratio and DPU (dividend). Many information provided to us during the REIT financial report but we overlook it. We trust the management will handle well the REIT, so that we can relax and collect our dividend yearly. They are the experts in the market. No! We need to check and assess them during their quarterly or semi-annually financial report. We need to check if the REIT is still healthy or debt ridden or badly manage or any other issue. Don’t forget it’s our hard earn money.
Below is the timeline how the Sasseur REIT management handle their debts and loan renewal.
Debt maturity profile (as at June 2019) (reported on Aug 2019) 2QFY2019
FY19 Summary
Weighted average debt maturity is 3.24 years with no major re financing until 2021
- $133 mil mature in 2021
- $351 mil mature in 2023
Gearing Ratio 29.7%
Debt maturity profile (as at Dec 2019) (reported on Feb 2020) FY2019
Weighted average debt maturity is 2.73 years with no major re financing until 2021
- $133 mil mature in 2021
- $345 mil mature in 2023
Gearing Ratio 27.8%
- ~SGD 367 million (RMB 1.90 billion) Onshore Facility ~4.75%
- SGD 125 million (~RMB 0.65 billion) Offshore Facility ~3.42%
- TOTAL ~SGD 492 million (~RMB 2.55 billion)
Debt maturity profile (as at Dec 2020) (reported on Feb 2021) FY2020
Weighted average debt maturity is 2.2 years
Completion of refinancing exercise in September 2020 ($133 mil mature in 2021?)
Reducing weighted average cost of debt from 4.41% to 3.20%
- ~SGD 271 million (RMB 1.34 billion) Onshore Facility maturity in March 2023
- SGD 221 million (~RMB 1.09 billion) Offshore Facility maturity in March 2023
- USD 20 million (~RMB 0.13 billion) Offshore Facility maturity in March 2023
- TOTAL ~SGD 508 million
Gearing Ratio 27.9%
Debt maturity profile (as at Dec 2021) (reported on Feb 2022) FY2021
*Actively exploring refinancing opportunities with a view to de-risk the current debt profile by staggering debt maturity and loan amount.
Weighted average debt maturity is 1.2 years
Reducing weighted average cost of debt from 4.41% to 3.20%
- ~SGD 278 million (RMB 1.31 billion) Onshore Facility maturity in March 2023
- SGD 214 million Offshore Facility maturity in March 2023
- ~SGD 27 million (USD 20 million) Offshore Facility maturity in March 2023
- TOTAL ~SGD 518.6 million
Gearing Ratio 26.1%
Weighted Average Lease Expiry in 2022 is 63.6% by Gross Revenue.
*Deliberate short lease to optimise tenant mix
Short lease strategy to adjust trade mix swiftly to adapt to fast-changing consumer preferences in China.
My thought: Will need to see how the management handle this, it’s considered high risk for high concentration of lease expiry.
Debt maturity profile (as at March 2022) (reported on May 2022) 1Q2022
* The Manager is in active discussion with various lenders to refinance the loan and de-risk the current debt profile by staggering its debt maturity and amount.
Weighted average debt maturity is 1 year
- ~SGD 276 million (RMB 1.30 billion) Onshore Facility maturity in March 2023
- SGD 214 million Offshore Facility maturity in March 2023
- ~SGD 27 million (USD 20 million) Offshore Facility maturity in March 2023
- TOTAL ~SGD 517.2 million
Gearing Ratio 26.2%
Weighted Average Lease Expiry in 2022 is 52.7% reduce from 63.6% by Gross Revenue.
* Deliberate short lease to optimise tenant mix
My thought: The management reduce the lease expiry by 10.9% of the Gross Revenue. I think this is good, at least it’s show that the management is working on the lease expiry issue.
Debt maturity profile (as at June 2022) (reported on Aug 2022) 1H2022
Weighted average debt maturity is 0.7 year
- ~SGD $ 269.1 million (RMB 1.30 billion) Onshore Facility maturity in March 2023
- SGD 214 million Offshore Facility maturity in March 2023
- ~SGD 27.9 million (USD 20 million) Offshore Facility maturity in March 2023
- TOTAL ~SGD 510.9 million
71.6% of Borrowings pegged to stable interest rate and hedged to fixed interest rate
Gearing Ratio 26.5%
*Refinancing on Track to Be Completed by End 2022
*A deal is in the works with a group of regional banks with presence in Singapore and Hong Kong/China;
• Banks are in their various stages of approval process
• Banks include existing as well as new lenders to the REIT and Sasseur Group
Weighted Average Lease Expiry in 2022
* Bulk of remaining leases by gross revenue expiring in 2022 already pre committed
92.6% of remaining leases (by gross revenue) expiring in 2022 have been pre committed.
Portfolio
1. Chongqing Liangjiang Outlet Mall (property since IPO in March 2018)
2. Hefei Outlet Mall (property since IPO in March 2018)
3. Kunming Outlet Mall (property since IPO in March 2018)
4. Bishan Outlet Mall (property since IPO in March 2018)
Breakdown of Portfolio Property Income since 2016 to 1H2022
Chongqing Liangjiang Outlet Mall 71.4% to 55.7% in 1H2022
Hefei Outlet Mall 11.5% to 19.0% in 1H2022
Bishan Outlet Mall 8.9% to 10.2% in 1H2022
Kunming Outlet Mall 8.2% to 15.1% in 1H2022
Occupancy Rate (before IPO launch to current)
1. Chongqing Liangjiang Outlet Mall 96% to 100% in 1H2022
2. Hefei Outlet Mall 93% to 96.5% in 1H2022
3. Kunming Outlet Mall 92% to 97.7% in 1H2022
4. Bishan Outlet Mall 86% to 89.3% in 1H2022
Sponsor Sasseur currently manages nine outlet malls and owns six of them, so we can probably expect a pipeline of future acquisitions for Sasseur REIT from the sponsor’s existing assets. (March 2018 record)
Summary: Since the start of IPO, almost every financial result will paint the prospect of acquisition of REIT sponsor pipeline properties but almost 4 years now there is still no sign of any acquisition, not even from other source.
Overall, the REIT is well managed by the management. NAV increase, DPU increase but unstable, properties income slightly diversifies by reducing the dependant of Chongqing Liangjiang Outlet Mall from 71.4% to 55.7%. Weighted Average Lease Expiry is well managed. Almost all the lease expiry in 2022 has been pre committed but still not reflected in the Weighted Average Lease Expiry. Will need to see the next financial result.
Weighted average debt maturity is not that well managed.
FY2019 (Dec 2019) $133 mil mature in 2021 and management said no major refinancing until 2021 but it was refinanced in September 2020. (strange but better early than late) And now this $133 mil together with the rest of the debts going to mature in March 2023 is having problem. Total amount of SGD 510.9 million loan is going to mature in 0.7 years or 7 months from now. The management said refinancing is on track to be completed by end of 2022 but the way the management stated don’t look promising.
• Banks are in their various stages of approval process (which stage?)
• Banks include existing as well as new lenders to the REIT and Sasseur Group (mean no concrete plans lol)
I will say this is a red flag, as a unitholder, we can’t wait for the last minute then the management start to do refinancing, the risk of higher interest rate and unsuccessful refinancing could result in capital depreciation when market react to the bad news and the stock price will fall. Example Dasin Retail Trust and EC World.
Please DYODD, this is for my own case study only.
