BHG Retail REIT's Beijing Wanliu Mall (Photo: BHG Retail REIT)BHG Retail REIT's Beijing Wanliu Mall (Photo: BHG Retail REIT)

China-focused BHG Retail REIT has reported a DPU of 1.29 Singapore cents for its 3Q 2016, beating forecast made at listing by 4.9%.

However gross revenue for the period came in 6% lower than expected at SGD15.4 million (USD10.9 million), while net property income missed its target by 3.5% at SGD9.5 million.

The REIT has attributed the lower figures to new taxes imposed by the Chinese government, and a weaker RMB against the SGD.

Distributable income for the period came in at SGD4.5 million, beating expectations by 5.1%.

“Portfolio occupancy remained high at 97.4%, rents for new and renewed leases turned in another quarter of healthy reversions”, said Chan Iz-Lynn, CEO of the REIT’s manager, in a statement on 11 November.

The REIT’s gearing was at 30.5%, with weighted average term to maturity of 2.2 years.

Moving forward, BHG Retail REIT pointed to China’s growing retail sales figure, which expanded by 10.4% year-on-year for the first three quarters of 2016 despite a slowing global economy, as reasons to be optimistic.

“The higher demand for mid-range retail brands is expected to continue, and will move in tandem with China’s rising middle income population”, said Chan, underscoring her confidence that the REIT’s properties are well positioned for this growth.

Units of BHG Retail REIT finished trading trading day about 0.8% higher from its previous close on the Singapore Exchange to end at SGD0.59.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.