Company Update: 28 November 2025
REIT-vitalisation Continues Amid Macro Conditions
- Operational strength. Sasseur REIT delivered a resilient 3Q25 performance, with 10.8% YoY outlet sales growth, occupancy remaining high at 98.5%, and a WALE of 2.0 years. The results were supported by strong tenant retention and longer lease commitments from sports, lifestyle and domestic fashion brands.
3Q25 Results
3Q25 EMA rental income rose 4.9% YoY to RMB166.3mn, driven by a 9.7% increase in the variable component on strong outlet sales. In SGD terms, EMA income rose 2.6% YoY despite currency headwinds. Weighted average cost of debt declined to 4.6%, and management expects it to fall below 4.5% by 4Q25.
Macro Resilience And Structural Tailwinds
China’s consumption environment remained soft nationwide, with retail sales growing only 2.9% YoY in October, the weakest in over a year, while CPI fell 0.3% YoY and PPI decline 2.3% YoY, reflecting weak household sentiment from the property downturn and labour softness. Despite this, outlet formats have continued to outperform traditional malls as consumers trade down to value-oriented retail. Medium-term policy direction has also turned more supportive, China’s 2026-2030 plan aims to significantly raise household consumption from the current ~40% of GDP, supported by RMB1.3 trillion in ultra-long treasury bonds (including RMB300bn reserved for consumption-related trade-in schemes) and a new 19-point plan to stimulate services and experiential consumption. This structural pivot supports Sasseur’s value-driven and experiential outlet model.
Valuation & Action
We maintain our OUTPERFORM rating with a revised target price of S$0.87, based on a Dividend Discount Model incorporating a lower 8.2% cost of equity (from 8.7%) and a 1.5% terminal growth rate. While DPU may soften marginally in the near term due to partial management fee payments in units and RMB/SGD translation headwinds, these effects remain manageable and transitory. Sasseur REIT’s strong operating performance, improving financing visibility, and defensive outlet positioning continue to underpin a resilient return profile. Medium-term upside is further supported by the potential for accretive acquisitions from the sponsor’s ROFR pipeline, which could enhance both NAV and income diversification.
Risks
RMB depreciation against SGD, slower-than-expected household spending recovery, and competition arising from online retail and new outlet supply.
