ESR-Reit secures $155m loan facility, files proofs of claim against Hyflux

The Hyflux Innovation Centre at 80 Bendemeer Road, on Feb 16, 2019.
The Hyflux Innovation Centre at 80 Bendemeer Road, on Feb 16, 2019.ST PHOTO: LIM YAOHUI

SINGAPORE - ESR-Reit has secured a $155 million unsecured loan facility to refinance existing indebtedness, acquire assets and improve currently owned assets as well as other general working capital purposes, its manager announced on Tuesday night (March 5).

It will comprise two tranches: a $75 million term loan facility maturing 36 months from March 4, 2019, and a $80 million term loan facility maturing in 48 months.

The lenders are the Singapore branches of Australia and New Zealand Banking Group (ANZ), CTBC Bank and Standard Chartered Bank. Australia and New Zealand Banking Group is the facility agent.

Separately, the industrial Reit also announced that its trustee had filed proofs of claim on March 1 against beleaguered water treatment firm Hyflux and its subsidiary Hyflux Membrane Manufacturing (S), which leases the Reit's property at 8 Tuas South Lane.

ESR-Reit noted that Hyflux Membrane has not defaulted on its rental payment, and that the landlord currently holds security deposits equivalent to three months of rental in the form of bank guarantees amounting to about $2.1 million, which have not been drawn down.

It also has been receiving leasing interest and enquiries for space at the property, owing to its location within an established industrial area and near the future Tuas Mega Port.

Hyflux Membrane is one of ESR-Reit's top 10 tenants and accounted for about 3.5 per cent of the total rental income for December 2018. The rental income received from Hyflux Membrane for the foruth quarter of 2018 was about $2.1 million.

In the hypothetical scenario that Hyflux Membrane had been unable to fulfil its rental obligations and the manager had been unable to lease out any of the space at the property in FY2018, ESR-Reit's distributable income and distribution per unit (DPU) would have fallen by 5.4 per cent based on annualised Q4 2018 figures.

ESR-Reit units closed unchanged at $0.540 on Tuesday before the announcements.