• Committed occupancy improved slightly to 93.0% from 92.9% as three portfolio assets recovered.
• Gross revenue and net property income increased 23.5% and 24.8% YoY respectively. This lifted 1H21 DPU by 33% to 1.12 Scts.

The Positives

+ Committed occupancy recovered slightly to 93.0% from 92.9% in 1H20. Occupancy recovered in three malls: Beijing Wanliu, Chengdu Konggang, and Hefei Changjiangxilu. Occupancy remained full at two malls: Xining Huayuan and Dalian Jinsanjiao.

+ Increase in gross revenue and net property income. The recovery in its gross revenue and property income was underpinned by healthy occupancy and an uptick in new leasing demand. No rental rebates were given in 1H21. Rents for new and renewed leases continued to recover.

+ Increase in DPU. With higher distributable income, DPU without waiver increased 33% to 1.12 Scts. The amount of distributions waived for its strategic investor units in 1H20 amounted to S$1.2mn, and the last distribution waiver was in 2H20. With the end of its sponsor’s distribution waiver, more units are entitled to distribution.

The Negative

– Nil.

Outlook

China’s GDP grew 12.7% YoY in 1H21. Retail sales of consumer goods recovered in tandem, by 23.0% YoY to RMB21.2tn. Urban residents’ disposable income per capita improved 12.6% YoY.

Coupled with recovering committed occupancy and continued AEI, BHG REIT appears poised for renewed growth. Gearing remained healthy at 34.9%, providing comfortable debt headroom to pursue M&A growth opportunities.

Source: Phillip Capital Research - 13 Aug 2021