Even though the US and China are engaged in a bruising and prolonged trade war, investors need to remember that China continues to demonstrate gross domestic product (GDP) growth as a result of domestic consumption. In a country with a 1.5 billion population along with a rapidly-rising middle-class segment, retail is still seeing excellent growth prospects.
In recent years, there have been a good number of real estate investment trusts (REITs) listed on the Singapore stock exchange that offers investors exposure to the Chinese economy. Some are pure-play REITs (i.e. REITs that have properties exclusively in China) while others are diversified REITs that own properties in many countries, including China.
Here are three high-yield pure-play Chinese REITs that allow investors to gain exposure to the Chinese retail segment.
1. BHG Retail REIT
BHG Retail REIT (SGX: BMGU) is the first pure-play China retail REIT sponsored by a leading China integrated retail group, Beijing Hualian Department Store Co., Ltd. The REIT’s portfolio consists of six retail properties located in Tier 1 and 2 cities in China. The properties have a gross floor area of around 311,691 square metres and are appraised at around RMB 4.57 billion.
In its latest H1 2019 earnings report, the REIT announced a 13.9% and 11.8% growth in revenue and net property income (NPI) respectively (in Singapore dollar terms). The amount available for distribution increased by 2.9% year-on-year to S$5.3 million for Q2 2019, and distribution per unit (DPU) for H1 2019 was 2.08 Singapore cents. Annualising the DPU gives the REIT a trailing distribution yield of around 5.9% based on the last traded price of S$0.70.
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 mall assets located in fast-growing Chinese cities such as Chongqing, Kunming and Hefei, with a net lettable area of 312,844 square metres.
Sasseur reported a strong set of earnings for Q2 2019, with rental income rising 1.3% year-on-year and distributable income climbing 10.5% year-on-year. DPU in Singapore dollars for Q2 2019 was 1.608 Singapore cents, and for H1 2019, total DPU was 3.264 Singapore cents. Annualising this DPU, the forward distribution yield for the REIT will be 8.2% at the last traded price of S$0.80.
3. Dasin Retail Trust
Dasin Retail Trust (SGX: CEDU) is a China retail property trust that invests in Chinese retail malls in the fast-growing Guangdong-Hong Kong-Macau Greater Bay Area. Dasin’s portfolio consists of four retail malls located in Zhongshan City in China.
For the REIT’s H1 2019 earnings, it reported a 4.9% year-on-year decline in revenue to S$35.2 million, while DPU declined by 5.5% year-on-year to 3.39 Singapore cents. Note that this level of distribution includes the waiver from the REIT’s two largest shareholders and that this waiver will expire in 2022. Annualising the DPU for H1 2019, the REIT’s forward distribution yield is around 8.1% at the last traded unit price of S$0.84.
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.