China represents a large and red-hot market for economic growth, particularly given rising consumer spending, and many investors are gunning for a slice of that growth. The country’s property market also offers strong growth, as the middle-income class grows and residents become more affluent – with more disposable income to spend. Although China’s retail-focused real estate market stands out, other sub-sectors of income-producing property will also benefit; be it industrial, logistics, e-commerce or commercial.
Here are four REITs listed in Singapore that offer investors a chance to invest in China properties and benefit from the rise of the Chinese consumer. Each REIT has its own unique characteristics and investors will also need to assess certain attributes as well as potential risks before committing their capital.
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1. EC World REIT
EC World REIT (SGX: BWCU), or ECW for short, is a specialised Chinese logistics and e-commerce REIT with a portfolio of seven properties located in the e-commerce cluster of the Yangtze River Delta. These properties offer investors exposure to the logistics and e-commerce sectors in Hangzhou and Wuhan, China.
Gross revenue for the REIT fell by 0.3% year-on-year in its latest quarter but distribution per unit (DPU) increased by 2.2% year-on-year to 1.501 Singapore cents. At its unit price of S$0.78 (as of the time of writing), ECW provides an annualised dividend yield of 7.7%. ECW has also announced the proposed acquisition of Fuzhou e-commerce, which is a high-quality, integrated e-commerce logistics asset, for about S$223.6 million. The acquisition is yield-accretive and is expected to increase DPU by 1.6%.
2. Sasseur REIT
Sasseur REIT (SGX: CRPU) is the first outlet mall REIT listed in Asia. The REIT’s portfolio consists of four retail outlet malls located in fast-growing Chinese cities of Chongqing, Kunming, and Hefei, with a combined net lettable area of 306,709 square metres.
Sasseur is unique as it has an entrusted management agreement with its tenants within the mall, so that a portion of the rental income is fixed, while there is also a variable component that is pegged to the outlet’s sales numbers. It is this variable component which outperformed IPO projections by 9.4%, resulting in DPU which was 9.3% higher than projected at 1.656 Singapore cents. The annualised yield for the REIT stood at 8.3% at its latest unit price of S$0.80.
3. Dasin Retail Trust
Dasin Retail Trust (SGX: CEDU), or Dasin for short, invests in, owns or develops land, uncompleted developments and income-producing real estate in China. The portfolio’s initial focus is on retail malls, with the REIT owning four retail malls located in Zhongshan City in the Guangdong Province of China.
For Dasin’s Q1 2019 earnings, revenue fell 5.9% year-on-year but net property income rose slightly by 0.5% year-on-year. DPU was down 6.9% year-on-year to 1.70 Singapore cents, although this was due to Xiaolan Metro Mall being closed off due to asset enhancement initiatives. Note too that the distribution amount is higher because of a waiver put in place by the REIT’s two largest owners. Without this waiver, the DPU would be 0.95 Singapore cents. The annualised distribution yield based on the latest unit price of S$0.88 is 4.3%.
4. Mapletree North Asia Commercial Trust
Mapletree North Asia Commercial Trust (SGX: RW0U), or MNACT for short, owns a portfolio of nine properties located in China, Hong Kong, and Japan. Only two out of the nine properties are located in China, one being in Beijing (a premier Grade-A office building) and the other in Shanghai (a premium quality business park development situated in Pudong). This helps to diversify the REIT’s exposure as the properties are spread out over three countries rather than just China alone.
The REIT reported a full-year 2019 DPU of 7.69 Singapore cents. At the latest unit price of S$1.40, the annualised yield for the REIT was 5.5%.
The Foolish summary
The four REITs above offer investors solid exposure to both logistics and retail properties in China. Each REIT has its own merits and investors should take time to go through the details of each to assess which one they would like to invest in.
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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 Royston Yang does not own shares in any of the companies mentioned.