Dasin Retail Trust, a China retail focused real estate trust, recently held an investor presentation for clients of Phillip Capital.
Here are the key takeaways from the presentation.
Dasin Retail Trust’s focus is on the Guangdong-Hong Kong-Macau Great Bay Area.
According to the REIT manager, this bay area is comparable to the San Francisco bay area, New York City bay area and Tokyo Bay area.
At a GDP growth of 7.9% in 2016, the Guangdong-Hong Kong-Macau Great bay area has the greatest growth among the four bay areas.
In addition, the bay area is one of China’s Three Major Economic Circles, with the other 2 being the Beijing-Tianjin-Hebei and Yangtze River Delta Economic Circle.
Dasin Retail Trust achieved S$58m in revenue in 2017, a 16% outperformance over forecast.
Gearing stands at 31.5% at 30 June 2018, with onshore debt cost of 5.3% and average offshore debt cost of 4.9%. The weighted average maturity of on-and offshore debt is 2.99 years and 1.52 years respectively.
For full year 2017 (1 Jan to 31 Dec 2017), the distribution per unit (DPU) is 7.16 Singapore cents vs forecast of 6.74 Singapore cents.
However, this figure is with the distribution waiver. Without the distribution waiver, the actual DPU is 3.25 Singapore cents.
This translates into a dividend yield of approx 4%. Do be cautious when buying REITs with a distribution waiver.
20 ROFR properties
Dasin Retail Trust has a pipeline of 20 ROFR properties. The REIT presently has a total gross floor area under management of 434,000 sqm, which can increase by 911,000 sqm to 1.35m sqm if all the ROFR properties were injected.
The ROFR properties are mainly in the cities of Zhongshan, Zhuhai and Macau.
Dasin Retail Trust has 4 properties in its portfolio, namely Shiqi Metro Mall, Xiaolan Metro Mall, Ocean Metro Mall and Dasin E-Colour.
The largest by valuation is Shiqi Metro Mall at RMB 2,980m (S$614m), followed by Xiaolan Metro Mall at RMB 2,312m (S$476m), Ocean Metro Mall at RMB 1,825m (S$376m) and Dasin E-Colour at RMB 322m (S$66m).
All the properties are 100% occupied as at 30 June 2018.
For investors looking for stability of income, about 61% of gross revenue is on a “fixed rent with built-in escalation” basis, followed by 15% on “fixed rent” and 12% on a “base rent plus turnover” basis.