SINGAPORE - Mapletree Logistics Trust (MLT) became the latest Singapore landlord to state that logistics provider CWT Pte Ltd, whose Hong Kong parent has failed to pay creditors, has not defaulted on its rental payments.
Trust manager Mapletree Logistics Trust Management said on Tuesday night (April 16) CWT Pte Ltd had no arrears due to date from current tenancy agreements for five MLT properties at 5A Toh Guan Road East, 4 Pandan Avenue, 6 Fishery Port Road, 38 Tanjong Penjuru and 52 Tanjong Penjuru. MLT also noted that it currently holds security deposits of six months of rental.
CWT Pte Ltd is a top tenant for MLT, with a revenue contribution of 9.1 per cent for the third quarter ended Dec 31, 2018, as disclosed in its results presentation dated Jan 21, 2019.
On Tuesday, CWT's parent, CWT International, reported that it was facing claims by creditors after it missed interest and fee payments to lenders of a HK$63 million amount, triggering a cross default of a HK$1.4 billion facility. CWT International's 100 per cent stake in CWT Pte Ltd is charged as security for that debt, raising the possibility that the lenders could seek to take possession of CWT Pte Ltd if CWT International does not pay up by Wednesday, April 17.
Concerns about CWT's ability to pay its rents led to a selldown on Tuesday of real estate investment trusts in Singapore that were landlords for the Singapore tenant.
MLT units closed a $1.42 on Tuesday, down 4 per cent. Cache fell 5.3 per cent to close at 71.5 cents, while Aims Apac Reit (AA Reit) slipped 1.4 per cent to $1.39.
Cache Logistics Trust and AA Reit have both said that CWT had not defaulted in its rental payments and that there were no arrears due.
Cache's manager revealed that CWT contributes to approximately 16.5 per cent to its gross rental income (GRI) as at April 16. This was lower than the 20.6 per cent four months ago as at Dec 31, 2018.
It said the weighted average lease to expiry of the CWT leases at CWT Commodity Hub and Pandan Logistics Hub is less than one year by GRI. The company has not defaulted in its rental payments and there are no arrears due as at Apr 16. But Cache holds an average of approximately three months security deposit in relation to these leases.
AA Reit's manager said that CWT, one of its top 10 tenants, has not defaulted on its rental payments under the lease agreements in relation to 20 Gul Way and 30 Tuas West Road. It said CWT is among its top 10 tenants and the gross rental income received from CWT's leases represented 8.4 per cent of the Reit's gross rental income for the third quarter of financial year 2019.
Its statement said: "AA Reit presently holds security deposits ranging from three to six months of rental in the form of bank guarantees amounting to approximately $4.5 million, and AA Reit's exposure to CWT's leases will be further reduced due to the expiry of the lease agreements, with the final lease expiring in July 2021. Based on AA Reit's Q3FY9 gross rental income, approximately 5.1 per cent of AA Reit's gross rental income from CWT will progressively expire in the current financial year ending Mar 31, 2020."
CWT International's parent HNA Group was one of China's most acquisitive companies until it began facing liquidity challenges and pressure from the government, Bloomberg reported on Tuesday. The conglomerate has agreed to sell more than U$25 billion of assets ranging from property to big shareholdings since 2018. Despite that, it still struggles to repay debt. The group repaid a local note after a delay last month.
CWT Pte has a $100 million note due on Thursday and another bond of the same amount due March next year, according to Bloomberg-compiled data.
"We hold the view that CWT Pte will pay its Singapore dollar bonds due on April 18 as CWT Pte holds assets and has on-going businesses," said Ezien Hoo, a credit analyst at Oversea Chinese Banking Corp told Bloomberg. "But its parent defaulting may complicate the process and there may be delays.
