DASIN Retail Trust (DRT) on Monday said its business fundamentals are " reasonably sound" throughout the protracted Covid-19 crisis, and expects to generate sufficient cashflow to meet working capital needs.

 

It gave its response to several queries from the Singapore Exchange (SGX), in relation to the group' s " significant" current liabilities of S$557.2 million and cash and bank balance of only S$123.98 million for the first half ended June 30, 2021.

 

DRT said the current liabilities were mainly due to the re-classification of S$242 million and US$134.29 million offshore syndicated term loan equivalent to S$422.66 million in aggregate of the group, and 375.15 million yuan (S$78,143,000) onshore syndicated term loan of the group, which are due and payable on Dec 19, 2021.

 

The group is in " active negotiations" with the lenders and believes the refinancing of the term loans is achievable within the stipulated timeframes, based on indicative terms discussed with the lenders.

 

In considering its payment obligations in the next 12 months, DRT said it has sufficient cash and cash equivalents and expects that adequate cashflow will be generated from its operations to meet working capital needs.

 

It recorded net cash of S$21.7 million from its operating activities in H1 2021.

 

In response to a separate SGX query, DRT said its concentration of credit risk is limited, given that it has many varied tenants and a credit policy of obtaining security deposits from tenants for the lease of its units.

 

It posted S$23.7 million in current trade and other receivables in H1 2021, an increase from S$20.3 million in the full year ended Dec 31, 2020.

 

Net trade receivables amounted to around S$8.36 million, mainly from tenants that have good credit records with the group, said the group.

 

It had recognised impairment loss allowance for expected credit losses (ECLs) amounting to S$3.7 million in H1 2021, in accordance with IFRS 9 Financial Instruments.

 

In doing so, DRT noted that it uses historical credit loss experience and adjusts for current conditions and forward-looking factors specific to the debtors and the economic environment, so as to determine the overall allowance for ECL.

 

Included in other receivables of S$14.08 million in H1 2021 was a recoverable net input value-added tax of approximately S$13.014 million.

 

In addition, non-current other receivables of S$467,000 relate to a 10-year finance lease receivable from a tenant.

 

The group said it has assessed the recoverability of the non-current other receivable and current trade and other receivables under IFRS 9 it believes the impairment loss allowance for ECLs has been adequately provided for as at June 30, 2021.

 

In another regulatory query on DRT' s " significant" trade and other payables of S$33.55 million in H1 2021, the group said included in other payables was a construction cost payable to a third party of around S$5.86 million - unsecured with fixed interest rate of 4.35 per cent per annum, repayable within the next 12 months.

 

Its total trade and other payables as at H1 2021 are not due for payment, and will be settled in accordance with relevant commercial terms varying from within 30 to over 90 days from June 30, 2021.

 

Accrued interest payables are settled on the interest payment due date.

 

" The board is continuously monitoring the group' s operations, and receives reports from management in relation to the group' s performance and financial status and nothing material has come to the board' s attention that warrants further disclosure to unitholders," it said.

DASIN Retail Trust reported on Monday a 55.2 per cent increase in distribution per unit (DPU) to 2.98 Singapore cents for its first half ended June 2021, from 1.92 cents a year ago.

 

This included a " distribution waiver" , through which major unitholders have waived a portion of their entitlement to distributions from the retail property trust.

 

Without the waiver, DPU for the half year rose 97.8 per cent to 2.67 Singapore cents from 1.35 cents a year ago, according to an exchange filing.

 

The higher DPU comes amid a 38.5 per cent increase in its revenue for the half year to S$51.3 million, mainly due to higher rental income and recovery from the impact of Covid-19, as well as contribution from Shunde Metro Mall and Tanbei Metro Mall which were acquired in July 2020.

 

Net property income rose from S$30.3 million a year ago to S$38.2 million in H1 2021. Distributable income more than doubled year-on-year to S$20.9 million, from S$8.8 million a year ago.

 

As at end-June, Dasin Retail Trust had a stable portfolio occupancy rate of 95.7 per cent and weighted average lease to expiry of 3.5 years by gross rental income, its trustee-manager said.

 

It added that in line with the trust' s " proactive asset management strategy" , Xiaolan Metro Mall will be undergoing asset enhancement initiatives to further enhance its tenant mix, with a view to bring in new tenants mainly from the food & beverage and children sector. The initiative is expected to be completed by the end of this year.

 

Wang Qiu, chief executive of the trustee-manager, said: " We are pleased with the encouraging financial performance for the first half of the year despite the challenges presented by the Covid-19 pandemic.

 

She added that " proactive asset management" will continue with the introduction of more experiential trades and defensive retail businesses, while gradually phasing out traditional trades and introducing brands with greater ability to attract customers.

 

" Though uncertainties still remain with the resurgence of Covid-19 in several countries, we remain optimistic that China is on the path of recovery where the consumer sentiment has been improving," she said.

 

The books closure date will be on Aug 31, and the DPU of 2.98 Singapore cents is expected to be paid on Sept 28.

As at Dec 31 2020, the trust& rsquo s portfolio comprises seven retail malls in China, located in Zhongshan, Zhuhai and Foshan cities in Guangdong, hosting a tenant base of more than 500 retailers.  They are valued at around RMB11.6 billion ($2.3 billion). 

Dasin Retail Trust, which owns a portfolio of seven retail malls in China, has secured further extension for $106.61 million in outstanding loans due on July 18. 

The loans, meant to help fund the acquisition of Doumen Metro Mall, will now be due on Dec 19.

Dasin Retail Trust Management, the trust&rsquo s manager, notes that the further extensions would allow the trust to jointly coordinate the refinancing of the offshore facilities with that of the Doumen Facilities. 

see also: Dasin Retail Trust' s price action suggests loan extension is successful

The trust&rsquo s manager is &ldquo still seeking&rdquo to secure refinancing of the outstanding loans and &ldquo is working to obtain the approvals for the refinancing from all the banks within the respective syndicate of lenders.&rdquo

 

On July 19, Dasin Retail Trust&rsquo s manager announced that Zhang Zhencheng, chairman and controlling shareholder of trust manager, as well as controlling unitholder of the trust had entered into a sale and purchase agreement with a unit of Sino-Ocean Capital for Sino-Ocean to acquire a 70% stake in the trustee manager, subject to regulatory approvals.

Sino-Ocean - which already owns 6.36% of Dasin - will also be granted a call option to acquire an additional stake in the trust such that its total stake can be as high as 26%.

As at Dec 31 2020, the trust&rsquo s portfolio comprises seven retail malls in China, located in Zhongshan, Zhuhai and Foshan cities in Guangdong, hosting a tenant base of more than 500 retailers.

They are valued at around RMB11.6 billion ($2.3 billion).