China continues to impress when it reported better-than-expected growth in retail sales and industrial production recently.
Data for the first two months of 2022 showed a 6.7% year on year jump in retail sales and a 7.5% year on year rise in industrial production.
The country with the largest population in the world continues to be a bastion of strength, posting an 8.1% growth in GDP for 2021.
Investors who are keen to gain exposure to the country’s real estate can consider buying China-based REITs that are listed on Singapore’s stock exchange.
We bring you four such Chinese REITs that recently raised their distribution per unit (DPU).
BHG Retail REIT (SGX: BMGU)
BHG Retail REIT is a pure-play Chinese retail REIT that owns six retail properties with a gross floor area of around 311,700 square metres as of 31 December 2021.
The REIT reported an improved set of earnings for its fiscal 2021 (FY2021).
Gross revenue rose 16.6% year on year to S$70.6 million while net property income (NPI) increased by 14.9% year on year to S$41.8 million.
The REIT’s malls enjoyed a recovery during FY2021 as economic conditions improved in China.
The committed occupancy rate remained high at 97% as of 31 December 2021.
DPU improved by 11.3% year on year to S$0.0217, giving the REIT’s units a trailing distribution yield of 4%.
BHG Retail REIT’s gearing stood at 34.1% with an average cost of debt of 3.9%.
The REIT continues to revitalise its malls with new offerings and has organised children and family activities to draw in the crowds.
China’s consumption demand remains strong, with retail sales up 12.5% year on year for 2021, and this should bode well for the REIT in FY2022.
Dasin Retail Trust (SGX: CEDU)
Dasin Retail Trust owns a portfolio of seven retail malls located in the cities of Foshan, Zhuhai and Zhongshan in China.
Revenue for FY2021 went up by 15.8% year on year to S$101.3 million while NPI increased by 10.9% year on year to S$78.4 million.
DPU with distribution waiver shot up by 32.5% year on year to S$0.0522.
The better performance was due to the acquisition of two malls in July 2020 as well as higher revenue from the REIT’s malls due to a recovery from COVID-19 and lower rental rebates.
The REIT maintained high occupancy of 93.9% as of 31 December 2021 with a well-spread out weighted average lease expiry (WALE) of 5.6 years by net lettable area.
Similar to BHG Retail REIT, promotional activities were held to engage shoppers while Dasin Retail Trust also introduced brands with high popularity such as Chow Tai Fook (SEHK: 1929).
EC World REIT (SGX: BWCU)
EC World REIT is a Chinese specialised logistics and e-commerce logistics REIT with a portfolio of eight industrial assets located along the Yangtze River Delta.
For FY2021, the REIT reported a 14.4% year on year increase in gross revenue.
NPI rose by 12.7% year on year to S$113 million while DPU climbed by 16.9% year on year to S$0.06263.
The better performance was attributable to lower rental rebates extended to tenants.
Portfolio occupancy stood high at 99.2% with a WALE of 2.7 years.
EC World REIT had aggregate leverage of 38.2% as of 31 December 2021 with a cost of debt of 4.1%.
One of the REIT’s properties, Fu Zhuo Industrial, received a notice of compulsory expropriation in early January.
The Chinese government will compensate the REIT with RMB 108.5 million, or 92.8% of the valuation of the property.
Unitholders need not get worried, however, as this property makes up just 1.6% of the REIT’s FY2021 NPI.
Sasseur REIT (SGX: CRPU)
Sasseur REIT’s portfolio comprises four retail outlet malls located in the cities of Chongqing, Kunming and Hefei in China.
FY2021 saw the REIT’s rental income increase by 5.5% year on year to RMB 611.9 million.
DPU increased by 8.5% year on year to S$0.07104 after retention for asset enhancement initiatives and working capital.
Aggregate leverage remained low at 26.1% with an average cost of debt of 4.4%.
Average portfolio occupancy remained healthy at 94.5% as of 31 December 2021.
Sasseur REIT has a unique leasing strategy of bringing in brand champions with upside sales potential, as part of its rental income is tagged to tenant sales.
The malls also have a VIP membership programme that has seen member numbers rise nearly six-fold to 2.6 million over the last four years.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
