Dasin Retail Trust, a property trust structured as a business trust with self-imposed REIT metrics such as gearing limits and distributing at least 90% of its distributable income, has a new major unitholder which also owns 70% of the manager.
Based on a Singapore Exchange (SGX) filing, Sino-Ocean Capital’s proxies acquired some 45.47 million units in Dasin Retail Trust for $13.36 million, translating around 29.4 cents per unit. Sino-Ocean’s acquisition price is significantly below the trust’s net asset value (NAV) of $1.40.
While the price of 29.4 cents would set a new low for the unit price, the transaction appeared to be “off-market”. Hence, the new low was not recorded. Following the transaction, units in Dasin Retail Trust last traded at 30 cents, translating into a distribution per unit yield of 17% and Price/NAV of 0.21x.
In October last year, Sino-Ocean Capital acquired a 70% stake in Dasin Retail Trust’s manager for around $8.3 million.
Why are prices so low? It is probably because Dasin Retail Trust appears to be facing refinancing headwinds. In March this year, Dasin Retail Trust entered into a non-binding memorandum on the potential divestment Shiqi MetroMall and Xiaolan Metro-Mall to a buyout fund managed jointly by GSUM Real Estate Fund Management Co, and a subsidiary of Sino-Ocean Capital. The monies from this sale, if it materialises, would immediately relieve the property trust of refinancing pressures.
On April 22, Dasin Retail Trust’s manager said in replies to unitholders that it is in informal discussions with lenders to refinance its offshore syndicated term loan facility of $132.9 million which matures on July 15 this year. The manager is also discussing refinancing terms for a $105.7 million loan due on Sept 19.
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In addition, the manager is in “active negotiations with the banks to secure the refinancing of offshore syndicated term loan facilities of up to the equivalent of $430.0 million”, and onshore loan facilities of RMB400 million ($83.2 million).
“Nothing material has developed since the announcement dated March 21, 2022, which warrants further disclosure to unitholders,” the manager added.
Technically, Dasin Retail Trust’s chart pattern reflects its refinancing woes, with no signs of the downtrend abating. At most, any rebound — and this could materialise when refinancing details are announced — is likely to encounter resistance between 31.5 cents and 32.9 cents.
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In terms of chart patterns and technical positioning, EC World REIT’s (ECW) unit price appears to have broken below a descending triangle at 65 cents on a surge in volume, indicating a target of 52 cents. Descending triangles are usually continuation patterns in a downtrend. Breakouts — whether up or down — often materialise on volume expansion, to provide the impetus for further moves. If ECW is unable to regain the 65 cents level by May 6, downwards momentum could pick up.
On April 21, ECW’s manager, in replies to questions from unitholders, said that it had commenced its refinancing exercise. In ECW’s announcement on April 7 in response to queries posed by the SGX, the manager said that the refinancing exercise is in the final stages of negotiation.
“The manager has actively engaged its lenders to assuage their concerns and conditions for the purpose of refinancing. At this juncture, the manager expects that the refinancing exercise will be completed prior to the maturity dates of the term loans,” ECW’s manager said. The loans mature in two tranches, in May and July.
In its replies, the manager said that China’s Three Red Lines caused lenders to become much more cautious in disbursing loans — hence the REIT is facing challenges on the refinancing front. A rebound would materialise when refinancing details are announced.
