Dasin Retail Trust: Proposed divestment would be used to pay off debt, but it’s not a done deal

A 1 yuan note. Photo by Rob on UnsplashA 1 yuan note. Photo by Rob on Unsplash

Dasin Retail Trust plans to use the proceeds of its proposed divestment of two malls to repay its outstanding loans, but the sale isn’t a done deal, the REIT said in a filing to SGX Friday with answers to shareholders’ questions before its annual general meeting (AGM).

The proceeds would be used to reduce both the offshore and onshore syndicated loans, the filing said.

In March, Dasin Retail Trust entered a non-binding memorandum of understanding (MOU) to potentially divest two malls to Wuhu Yuanche Bisheng Investment Center. The malls are Shiqi Metro Mall and Xiaolan Metro Mall, located in Zhongshan, Guangdong Province, in China.

On Friday, the trust noted the non-binding MOU is not yet a definitive agreement, and there is no certainty a deal will take place.

However, the onshore and offshore lenders have agreed to an extension of three months from 19 March to explore the divestment proposal, the filing said.

Crown jewels?

When asked why the trust was disposing of Shiqi Metro Mall and Xiaolan Metro Mall — which the questioner said were the two biggest revenue contributors and “the crown jewels” of the portfolio, the trust said those assets were mature.

“The trust’s portfolio also comprises quality growth assets including Ocean Metro Mall, Doumen Metro Mall and Shunde Metro Mall, supported by healthy weighted average lease to expiries and occupancies, which will provide growth opportunities,” Dasin Retail Trust said.

The trust said it is in talks with lenders on refinancing its debt.

For the offshore syndicated term loan facility, the trust is in informal talks with lenders on refinancing up to S$132.9 million related to the acquisition of Shunde Metro Mall and Tanbei Metro Mall, the filing said, noting the loan was due 15 July. In addition, informal talks are being held on the offshore syndicated term loan facility related to the Doumen Metro Mall acquisition to refinance up to S$105.7 million, the filing said, noting that loan was due 19 September.

Active negotiations

Dasin Retail Trust said it is also in active negotiations with banks to refinance offshore syndicated loan facilities of up to S$430 million in total, and up to CNY400 million of onshore syndicated term loan facilities.

When asked if the trust might liquidate, the answer was that the board believed the trust had sufficient cash to meet day-to-day working capital needs.

“Besides that, the business fundamentals of the trust are reasonably stable even during the Covid-19 pandemic and the group met its loan repayment obligations and complied with the stated financial covenants during the year and up to the date of this financial statements,” Dasin Retail Trust said.

The proposed divestment of the two malls would be an interested person transaction.

The Shiqi Metro Mall’s and Xiaolan Metro Mall’s potential buyer, Wuhu Yuanche Bisheng Investment Center, is a buyout fund with institutional and private investors, and is managed jointly by GSUM Real Estate Fund Management and a subsidiary of Sino-Ocean Capital Holding, which is a substantial unitholder of Dasin Retail Trust.