Here Are 3 Things Investors Should Know About BHG Retail REIT

BHG Retail REIT (SGX: BMGU) is one of the Singapore stock market’s newest real estate investment trusts considering that it listed only on December 2015.

It focuses on retail malls in China and currently has a portfolio with five properties. Its sponsor is the China-listed Beijing Hualian Department Store Co. Ltd, which is part of the Beijing Hualian Group, one of China’s largest retail operators.

REITs that invest predominantly in Chinese retail malls are rare in Singapore’s stock market. The only other REIT here that does so is CapitaLand Retail China Trust (SGX: AU8U).

Here are three things about BHG Retail REIT’s business that may interest investors:

1. Latest financial performance

BHG Retail REIT income statement table
Source: BHG Retail REIT earnings presentation

As you can see from the table above, the REIT’s gross revenue and net property income for the first nine months of 2016 are both ahead of the projections given in the IPO prospectus.

But, the weakening of the renminbi in relation to the Singapore dollar had caused the REIT’s revenue and net property income to be lower than predicted in Singapore-dollar terms. The good thing is BHG Retail REIT’s distribution per unit is still better than expected.

2. Future growth pipeline

BHG Retail REIT ROFR chart
Source: BHG Retail REIT earnings presentation

BHG Retail REIT currently has the right of first refusal (ROFR) on 13 of its sponsor’s retail properties. These 13 properties have a  combined area nearly thrice the size of BHG Retail REIT’s existing portfolio. They are future acquisition opportunities for the REIT should its sponsor want to divest any of the 13 properties.

3. The occupancy rate

The occupancy rate of a REIT is an important metric since this is a gauge of the strength of the market demand for a REIT’s properties.

As of 30 September 2016, BHG Retail REIT’s average occupancy level stands at 97.4%. For a detailed breakdown of the occupancy rates for all its five properties, you can check out the table below:

BHG Retail REIT occupancy rate table
Source: BHG Retail REIT earnings presentation

You may notice that the Chengdu Konggang mall has a much lower occupancy rate compared to the rest of the REIT’s portfolio. The mall’s occupancy rate is low due to an ongoing exercise to rejuvenate the mall.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.