Sasseur REIT: Aiming for acquisition within 12-18 months

Chinese yuan (renminbi) notes. Photo by Eric Prouzet on UnsplashChinese yuan (renminbi) notes. Photo by Eric Prouzet on Unsplash

Sasseur REIT is aiming to deliver an acquisition within the next 12-18 months, the China outlet mall REIT said in answers to shareholders’ questions filed to SGX Thursday ahead of its annual general meeting (AGM). 

“We aim to expand the REIT’s portfolio in China where domestic consumption is expected to remain fairly robust in the years ahead. We will place our focus on cities in China with large population base and favourable demographic trends, and identify income-producing properties with attractive fundamentals and long-term growth potential,” Sasseur REIT said.

The REIT said its priority would be its sponsors’ right-of-first-refusal (ROFR) assets, which are two large-scale outlets located in Xi’an and Guiyan. 

Additionally, the Sasseir Group is expanding its network of third-party outlets in various China cities being managed under the “Sasseur Outlet” branding, with an October 2021 opening of a Suzhou outlet bringing the total under management to 14, the filing said.

“Such third-party outlets could be made available for Sasseur REIT to acquire when an opportunity arises,” the REIT said. 

Zero-Covid impact

When asked about how China’s zero-Covid policy, which has resulted in lockdowns in certain regions, would affect the outlets’ businesses, Sasseur REIT said its four outlets are located in Chongqing, Hefei and Kunming and haven’t been affected by the current Covid outbreak. 

“So far, it is business as usual in these four outlets. However, due to stricter inter-city travel measures being imposed as part of the country’s Covid-19 controls, the flow of shoppers from outer cities is somewhat reduced,” the REIT said.

“We expect the shopper flow to normalise gradually when the current wave of Covid-19 transmissions has slowed down which should lead to a relaxation of inter-city travel measures,” the REIT said.

Sasseur REIT added that the fixed component of its entrusted management agreement (EMA) rental income would cushion the REIT from any potential negative effect on outlets’ sales in the event of a severe Covid outbreak.

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