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Sasseur REIT Takes China Assets’ Re-financing In Stride

ReitAsiaPac spoke to Cecilia Tan, CEO of Sasseur Asset Management Pte Ltd, and asked her about her views on China, where its zero-Covid policy and property slump have dampened economic growth and caused concerns among investors.


There have been defaults among Chinese developers who have sought to raise funds by selling assets. Does this have knock-on impacts on commercial property and specific retail property in China? Why or why not? How has Sasseur REIT been impacted?

The liquidity crisis came about because of the Chinese government’s efforts to curtail excess leverage in the residential property sector. This has also negatively impacted the property sector, including the commercial and retail property segments, to some extent.

A large number of the debt defaults are high-profile cases involving large-scale residential property developers, and this has impacted foreign investors’ confidence in China’s broader property sector. Many homeowners are also impacted by China’s deepening residential property bust, which greatly reduces their spending capabilities and willingness to spend.

Sasseur REIT is not directly affected by the crisis as the REIT is not involved in the development of properties in China. In addition, Sasseur Group, which is the Sponsor of Sasseur REIT, is also not involved in the development of properties in China as its core business is the management and operation of outlets in China.

But the high-profile loan defaults have definitely led to more caution amongst lenders towards the China property sector in general, even for non-property developers. As we are currently in the midst of refinancing Sasseur REIT’s debts due in March 2023, many analysts and investors are watching very closely how we are progressing on this. Barring unforeseen circumstances, we remain focused on completing the refinancing by the end of this year

Sasseur (Chongqing Liangjiang) Outlets

Not limited to developers, EC World REIT has similarly faced issues with access to debt capital. Some market watchers point to master leases as a contributing factor. To what extent are such issues prevalent among Chinese REITs, or how is Sasseur REIT insulated from such matters?

There are only a handful of China-focused S-REITs. Indeed, the recently publicised refinancing woes of EC World REIT and Dasin Retail Trust have put the capital management of China-focused S-REITs under the market spotlight.

For Sasseur REIT, its Entrusted Management Agreement (EMA) is not a master lease structure. It is a management service structure whereby the Entrusted Manager, a subsidiary of the Sponsor, is entrusted by Sasseur REIT to undertake the management, operation and leasing of all its four outlets in China. In return, the Entrusted Manager provides Sasseur REIT with an income in the form of EMA Resultant Rent, which comprises a fixed rent component and a variable rent component which is directly linked to the actual sales achieved by the four individual outlets in China.

This model is designed to provide unitholders with some level of visible and stable cashflows, with the potential upside of higher income in line with higher sales achieved at the outlets. Under this EMA model, the Sponsor is financially responsible for all the outlets’ operating costs and expenses, which means Sasseur REIT is insulated from rising property operating costs due to inflation.

This EMA model has proven to be especially resilient as it has enabled Sasseur REIT to achieve a year-on-year higher distribution in 2020 during the height of the COVID-19 pandemic in China compared to the pre-pandemic period in 2019.

What is the main hurdle for pure-play Chinese S-REITs in the near term? What are your strategies for addressing those hurdles?

The main hurdle is the uncertain operating climate in the short term due to China’s dynamic zero-COVID strategy. 

This implies risks of further lockdowns, which may cause unexpected disruptions to operations. Any people movement restrictions and inter-city travel restrictions will affect people’s sentiment to spend. Another concern is the delayed reopening of the Chinese economy, which may have a negative knock-on effect on the economic growth prospects.

This year, we are focused on completing Sasseur REIT’s refinancing. Despite China’s zero-COVID strategy, we continue to focus on driving sales at the outlets through proactive asset management action by:

  • Adopting an active and flexible approach to optimise the tenant mix
  • Accelerating digitisation efforts to capture sales and mindshare
  • Recruiting more new VIP members and enhancing current loyalty benefits
  • Continuing to roll out interactive and exciting thematic events, such as the recent anniversary sales events, which continue to draw large shopper crowds each year

How has Sasseur REIT been performing in the above macroeconomic backdrop?

Sasseur REIT has been making steady and growing full-year distributions per unit (DPU) since listing in 2018. For the full year ended December 31, 2021, the REIT’s DPU increased by 8.5% year-on-year to 7.104 Singapore cents despite an uncertain economic backdrop during the second half of the year. This represents a record-high full-year DPU for Sasseur REIT and its third consecutive year of growth, which surpassed the pre-COVID-19 level. This achievement is a testament to the strength and resilience of the REIT’s unique and innovative EMA model, aligning the REIT Manager’s interests with unitholders.

In terms of unit price, Sasseur REIT outperformed the FTSE REIT Index in 2021, rising 3.1% against the FTSE REIT index’s 0.2% gain. The REIT’s total return for this one year was 11.7% (Bloomberg and SGX data as of December 31, 2021).

Despite a seasonally subdued operating quarter from April to June 2022 and the ripple effects of widespread lockdowns in China, the sales of the REIT’s outlets have been commendable, with Sasseur REIT reporting a 1.1% year-on-year increase in DPU for the first half of 2022.


Ms Cecilia Tan was appointed the CEO of Sasseur Asset Management Pte Ltd in August 2021. Before joining Sasseur Asset Management, Ms Tan was the Senior Strategic Adviser to Mr Vito Xu, the Chairman and Founder of Sasseur Group, the Sponsor of Sasseur REIT. Her previous appointments included being the Chief Financial Officer and Chief Operating Officer of KOP Group Pte Ltd, Executive Vice-President (Real Estate Fund Management) of Pacific Star Group, and Chief Investment Officer of Macquarie Pacific Star Prime REIT Management Pte Ltd, the manager of Macquarie MEAG Prime REIT (now known as Starhill Global REIT) and an Independent Director of Roxy-Pacific Holdings Limited.