Dasin Retail Trust widens net loss in H2 to $221.5m, prompting queries from Sias
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Ocean Metro Mall is one of Dasin Retail Trust’s seven retail properties in the Guangdong-Hong Kong-Macau Greater Bay Area.
PHOTO: DASIN RETAIL TRUST
Michelle Zhu and Tessa Oh
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SINGAPORE - Dasin Retail Trust’s (DRT) net loss for the second half ended December 2022 has widened to $221.5 million from $51.8 million in the same period a year ago, statements prepared on a going concern basis indicated.
The latest set of results translates to a loss per unit (LPU) of 27.3 cents compared with an LPU of 6.61 cents for the year-ago period.
LPU for financial year 2022 amounted to 34.55 cents compared with an LPU of 6.26 cents for the previous year.
Revenue over the half-year period dropped 24.7 per cent to $37.6 million from $50 million in the second half of financial year 2021. The lower top line comes amid lower contributions from all malls in the trust’s portfolio, which comprises seven retail malls with direct exposure to the Guangdong-Hong Kong-Macau Greater Bay Area.
Net property income (NPI) fell 33.6 per cent to $20.6 million from $31 million in the previous comparative year. No distribution has been declared for the period as the trust has defaulted on loans worth about $910 million.
Following the release of the results, minority investor advocacy group Securities Investors Association (Singapore), or Sias, sent questions to DRT relating to unit-holders’ concerns over the results, among other matters.
On the loan defaults, Sias asked the trust to explain the hurdles it faces in disposing some of its assets to deleverage and address the defaults. It also requested the trustee-manager to provide an on-the-ground update on the operating statuses of DRT’s seven malls in Guangzhou.
On the fair value changes in DRT’s investment properties, Sias noted that the trust is now in breach of the gearing, interest-coverage and loan-to-valuation ratios required under its offshore facilities.
It asked the trust to elaborate on how this would impact the refinancing of both the offshore and onshore facilities, as well as the progress that has been made in this area.
DRT’s full-year revenue was down 15.8 per cent to $85.3 million from $101.3 million in financial year 2021.
The NPI for financial year 2022 stood at $47.2 million, down 31.8 per cent from $69.2 million in the previous year.
The NPI margin fell 13.1 percentage points to 55.2 per cent for FY2022, compared with 68.3 per cent previously. The trustee-manager said this was primarily due to a loss allowance on receivables, excluding which would have seen the margin at 75.6 per cent.
In its outlook, DRT’s trustee-manager acknowledged that there were material uncertainties over the trust’s ability to remit funds out of China for the payment of interest expenses for two of its offshore facilities, as well as essential offshore operating business expenses, over the next 12 months.
It cautioned that there could be an impact on the classifications of its assets and liabilities – along with the ability to realise assets at their recognised values, and extinguish liabilities at the amounts stated in the financial statements – should the trust be unable to continue as a going concern.
As at end-2022, DRT’s total liabilities at the group level stood at $1.3 billion, compared with $1.4 billion in the same period a year ago.
In addition to its questions on the latest results, Sias asked DRT for an update on the proposed sale of Shiqi Metro Mall and Xiaolan Metro Mall, as well as that of any other assets.
It also asked the trust to clearly define the roles and responsibilities of its management team, including those of chief executive of the trustee-manager Wang Qiu and chief financial officer Steven Ng.
It queried the trust on the board’s level of involvement in operational and strategic matters, as well as how effective the trustee-manager has been in handling matters of the trust – especially in relation to the winding-up petition against Sino Ocean Capital in Hong Kong.
Earlier this month, DRT announced that talks with a “reputable Chinese entity” over a memorandum of understanding (MOU) had fallen through. The MOU was related to the trust’s restructuring of its loan maturities.
Sias has asked DRT to state all the options that are being explored in its restructuring, including details on the individuals who are leading the negotiations, the assets involved, and the counter-parties.
The group also noted that some unit-holders have expressed concerns regarding the potential illegality of the transactions outlined in the MOU. It has therefore requested DRT’s board and management to provide clarity on the transactions in question, and the potential laws that might be breached.
Units of DRT closed 1.6 per cent lower at $0.12 on Monday. THE BUSINESS TIMES
