Dasin Retail Trust&rsquo s price action suggests that the either the refinancing or the loan extension of the almost $500 million of loans that mature on July 18 has been successful. Of the $500 million, $419.5 million is offshore debt, and $80.1 million is onshore debt.

Dasin Retail Trust&rsquo s rebound in price, from a low of 46 cents to the close of 50.5 cents took place in the afternoon of July 16. During the morning, Dasin Retail Trust&rsquo s unit price remained weak. Even with the rebound, prices are still down 36% this year, and the stock is trading at just 0.35 times its net asset value - as at Dec 31, 2020 - of $1.41.

 

On July 5, Dasin&rsquo s manager announced that the trust&rsquo s sponsor and major unitholder Zhang Zhencheng signed a non-binding memorandum of understanding (MOU) with Sino-Ocean Capital Holding. An earlier non-binding MOU with ARA Asset Management was called off. The Sino-Ocean transaction includes the Chinese SOE taking a stake in the trust such that it would hold around 25% of the trust. Currently, Sino-Ocean owns 6.25% of Dasin.

 

To be sure Sino-Ocean is a more robust and stronger name for Dasin than ARA. In the meantime, despite strong overshold readings, short-term technical indicators did not quite form a positive divergence with price. However the bullish engulfing pattern on the candlestick chart indicates at least a temporary bottom, and is likely to herald a rebound of sorts. Resistance appears at the top of the shadow at 58.5 cents.

 

- UPDATE ON STATUS OF REFINANCING OF ONSHORE AND OFFSHORE FACILITIES

- TERMINATION OF EXISTING SALE AND PURCHASE AGREEMENT WITH ARA GROUP

- MOU WITH POTENTIAL NEW PARTNER, SINO-OCEAN CAPITAL HOLDING LIMITED

 

Update on status of refinancing

 

The board of directors (the " Board" ) of Dasin Retail Trust Management Pte. Ltd. (the " Trustee- Manager" ), as trustee-manager of Dasin Retail Trust (the " Trust" ) refers to the announcement in respect of the extension of the tenure of the Offshore Facilities dated 20 January 2021 (the Extension Announcement" ).

Further to the Extension Announcement, the Board of the Trustee-Manager, as trustee-manager of the Trust, wishes to highlight that the Trust is currently still seeking to secure the refinancing of the Offshore Facilities and to that end is working to obtain the approvals for the refinancing from all the banks within the syndicate of lenders while contemplating other possible solutions, including applying for a further extension. The Trustee-Manager will also continue to keep Unitholders apprised of any relevant developments.

 

Update on Strategic Partnership with ARA

 

Separately, the Board of the Trustee-Manager has been informed by Mr. Zhang Zhencheng, Chairman and controlling shareholder of Trustee-Manager, as well as Aqua Wealth, a controlling unitholder of the Trust, that all relevant parties have agreed to terminate the SPA and will not be proceeding with the proposed transaction under the SPA.

 

Update on potential partnership with Sino-Ocean Capital

 

The Board of the Trustee-Manager has also been informed that Mr. Zhang Zhencheng had entered into a non-binding memorandum of understanding with Sino-Ocean Capital Holding Limited (" Sino-Ocean Capital" ) on 5 July 2021 in pursuance of a strategic partnership with Sino-Ocean Capital (" Sino-Ocean Capital Partnership" ). Sino-Ocean Capital is a top domestic real estate fund management company, and an outstanding alternative asset management company in China. Sino-Ocean Capital, which currently holds approximately 6.36% of the total issued units in the Trust (via its affiliate Glory Class Ventures Limited (" Glory Class" )), is also a long-time partner of the Sponsor and Mr. Zhang Zhencheng.

The Edge Singapore    Published on Fri, Jul 02, 2021 / 8:58 PM GMT+8 / Updated 2 days ago

Dasin Retail Trust has rebounded off a low of 59 cents made on June 30, to end the week at 61 cents. At this price, the trust is priced at just 0.43 times its net asset value of $1.41 which represents a hefty discount.   

On April 28, Zhang Zhencheng, owner of Dasin Retail Trust&rsquo s trustee-manager and the trust&rsquo s major unitholder, and a unit of ARA Asset Management announced that ARA would take a 50% stake in the manager, and acquire approximately 5% of Dasin units from Zhang.   For the Dasin units, ARA would acquire a 2.5% stake first, followed by the remaining units to make its stake up to 5%. A business update by Dasin on May 17 said the sale shares of the manager and the initial stake in the trust is expected to complete in May this year. There has to-date been no announcement of the completion of this transaction. In addition, the units in Dasin held by Zhang rose from 53.56% to 53.7% because of fees paid to the trustee-manager in units.

 

A representative of Dasin&rsquo s manager said: &ldquo for the ARA deal, if and when there are further updates from the Chairman and controlling shareholder of the Trustee-Manager, we will make the necessary announcements.&rdquo

 

Separately, as at May 4, the trustee-manager has announced that Aqua-Wealth Holdings, owned by Zhang, has pledged 38 million Dasin Retail Trust units, or 4.87% at that date, to CGS-CIMB.   The units are pledged for the financing of Aqua Wealth' s trades in securities with or through CGS-CIMB.
Unrelated to the pledged shares, almost $500 million of debt comes due on July 18. Of this, $419.5 million is offshore debt, and $80.1 million is onshore debt. The market grapevine says that the financing is taking a little longer and ARA could be stepping in as part of the syndicated loan.

 

&ldquo We will make the announcement to update the market upon entering into a refinancing agreement,&rdquo Dasin&rsquo s manager says via email.

 

Dasin is not the only property trust under presssure.  Keppel DC REIT  is at a one-year low. Technically, it broke below the twice-tested $2.53 level, indicating a downside of $2.33. At present, short term indicators are sufficiently oversold to trigger a rebound, and minor support at $2.40 could also lead to a bounce. Resistance for the bounce is at $2.53. Its 1HFY2021 results due out later this month, could shed more light into the sell-down. By then, prices could have bottomed.

 
 

 

Not since Eagle Hospitality Trust in the closing months of FY2019 has a property trust fallen so sharply in such a short time. Dasin Retail Trust &mdash styled as a business trust rather than a REIT &mdash is down 16.7% since June 16, 2020. At its last done price of 60 cents, the trust is trading at just 0.42 times its latest reported net asset value of $1.41.

 

A quick glance through Dasin&rsquo s business updates for 1QFY2021 dated May 17 shows a recovery from the Covid-19 slump a year ago. Gearing at a reasonable 37.2%, weighted average lease expiry (WALE) is 5.9 years by net lettable area, shorter based on gross rental income, 1Q2021 revenue is up 87% y-o-y, and is at 94% of 1QFY2019 pre-pandemic levels.

 

So what is wrong? On April 28, Zhang Zhencheng &mdash owner of Dasin Retail Trust&rsquo s trustee-manager and the trust&rsquo s major unitholder &mdash and a unit of ARA Asset Management announced that ARA would take a 50% stake in the manager, and acquire approximately 5% of Dasin units from Zhang. For the Dasin units, ARA would acquire a 2.5% stake first, followed by the remaining units to make its stake up to 5%. A business update by Dasin on May 17 said the sale of shares of the manager and the initial stake in the trust is expected to complete in May this year. There has to-date been no announcement of the completion of this transaction. In addition, the units in Dasin held by Zhang rose from 53.56% to 53.7% because of fees paid to the trustee-manager in units.

 

Separately, as at May 4, the trustee-manager has announced that Aqua-Wealth Holdings, owned by Zhang, has pledged 38 million Dasin Retail Trust units, or 4.87% at that date, to CGS-CIMB. The units are pledged for the financing of Aqua Wealth&rsquo s trades in securities with or through CGS-CIMB.

 

Unrelated to the pledged shares, almost $500 million of debt comes due on July 18. Of this, $419.5 million is offshore debt, and $80.1 million is onshore debt.

 

The market grapevine is suggesting that China Merchants Bank pulled out of the syndicated loan for an unknown reason. Bank of China is likely to step in to ensure that the loans are renewed and disbursed. ARA could also be stepping in as part of the syndicated deal. The Edge Singapore has approached the trustee-manager for updates on Dasin&rsquo s refinancing progress and the completion of the transaction with ARA.

 

On April 28, in answers to queries from the Singapore Exchange (SGX), the trustee manager affirmed that the trust was in a negative working capital position with net current liabilities of $406.7 million as at Dec 31 last year. The negative working capital position was mainly due to re-classification of $419.5 million offshore syndicated term loan equivalent and RMB386 million ($78.14 million) onshore syndicated term loan from non-current liabilities to current liabilities, as these term loans are due and payable in July.

The trustee manager asserted that Dasin&rsquo s business fundamentals remained reasonably sound throughout the Covid-19 pandemic, and that it generated $59.3 million in net positive cash flows from operating activities in FY2020.

 

While both REITs and business trusts are constituted by trust deed, a REIT manager may be removed by a simple majority while 75% of votes are needed to remove a business trust&rsquo s trustee-manager. Business trusts are not required to distribute a certain percentage of their income, unlike REITs, nor do they need to adhere to the regulatory cap on gearing of 50% for REITs.

May be this is the reason for some jokers to sell.

https://www.channelnewsasia.com/news/asia/covid-19-delta-variant-china-guangzhou-guangdong-dongguan-15059452

DASIN Retail Trust' s trustee-manager on Thursday announced that its chairman Zhang Zhencheng, as well as Aqua Wealth Holdings, has entered into a sale and purchase agreement with two subsidiaries of ARA Asset Management, to sell a 50 per cent stake in the trustee-manager, as well as some 5 per cent of the total units issued in the trust.

 

Mr Zhang is also a controlling shareholder of the trustee-manager, while Aqua Wealth Holdings is a controlling unitholder of the trust.

 

The two ARA subsidiaries involved in the transaction are: ARA DSRT (Holdings) - which will acquire the 50 per cent stake in the trustee-manager from Mr Zhang and ARA Real Estate Investors 22 - which will, at the same time, acquire some 5 per cent of the total issued units in the trust from Aqua Wealth in two separate tranches.

 

The first tranche will comprise some 19.5 million, or 2.5 per cent of units in Dasin Retail Trust, while the second tranche will comprise the remaining corresponding number of units that will bring the collective amount to 5 per cent of units in the trust, as at the second completion date.

 

The transfer of the sale shares and the first tranche sale units is expected to be completed in May.

 

In a bourse filing, the trustee-manager said that " leveraging ARA' s established track record and expertise in Reit (real estate investment trust) management, as well as its global network of investors, (the trustee-manager) will work closely with ARA to drive operating performance and take the trust into its next phase of growth" .

 

As at Dec 31, 2020, ARA has some S$116 billion in gross assets under management globally, and is among the largest and fastest growing real assets fund managers in Asia-Pacific. It manages both publicly-listed Reits and private funds in real estate, infrastructure and credit, with operations covering Asia, Europe and North America.

 

" ARA and the sponsor of (Dasin Retail Trust), Zhongshan Dasin Real Estate, will also jointly explore new fund products and business opportunities to establish a broader China retail platform in support of the trust," added the trustee-manager.

 

It is looking to " crystallise opportunities" in the Greater Bay Area (GBA), which is touted to be one of the fastest-growing regions in Greater China and " poised to become an economic powerhouse for China over the next decade" .

 

" With strong growth prospects, promise of further opening-up and an improvement in the business environment, the GBA remains a key attraction to global investors looking to ramp up investment in the region. The strategic partnership with ARA provides (the trustee-manager) with enhanced capabilities and access to a wider pool of institutional capital to crystallise opportunities in the GBA," said the trustee-manager.

 

Mr Zhang added: " We hope to combine our local market expertise with ARA' s funds management experience to increase our competitive edge in the region and expand our access to institutional capital. Together, we will have significant resources and opportunities to grow Dasin Retail Trust."

It plans to achieve this in 3-5 years' time through inorganic acquisitions of sponsor' s assets as well as efforts to improve rents.

 

CHINESE shopping mall landlord Dasin Retail Trust' s CEO Wang Qiu targets to double the market capitalisation of the business trust from about S$565.3 million (as at April 9) to S$1 billion in three to five years' time.

 

One way it plans to do so is through inorganic acquisitions of its sponsor Zhongshan Dasin Real Estate' s assets, to which it has the right of first refusal (ROFR), Ms Wang said in Mandarin in an interview with The Business Times last month.

 

The trust is already eyeing some of the better-quality assets such as Sanjiao Metro Mall, Shiqi Metro Mall No.2, Fusha Metro Mall, Xinjiayuan Metro Mall and Xinghui Metro Mall in Zhongshan, Guangdong province.

 

Over the last two years, the trust has acquired three assets - Doumen Metro Mall in Zhuhai, Shunde Metro Mall in Foshan, and Tanbei Metro Mall in Zhongshan, all of which are located in Guangdong province - from the sponsor.

 

These have helped to support the trust' s performance and partially stem its decline in distribution per unit (DPU) in FY20, especially with its shrinking distribution waiver.

 

When it listed in 2017, the trust had put in place a distribution waiver for its major unitholders which tapers each year until the end of 2021. This was to give its assets that only recently began operating (such as Ocean Metro Mall and Dasin E-Colour which opened in 2014 and 2015, respectively) time to stabilise without affecting DPUs.

 

It was a kind of income support mechanism, not uncommon among newly listed Reits or for newly injected assets.

 

Still, the significant drop in the trust' s DPU from 6.82 Singapore cents in FY19 to 3.94 cents in FY20, after applying the distribution waiver, despite a 15 per cent increase in revenue to S$87.5 million, and 17 per cent incline in net property income to S$70 million, might have caused some worry among investors.

 

But without the distribution waiver, the drop would have been less drastic, the trust said. FY20 DPU would have been 2.87 cents, compared to 3.95 cents in FY19. The DPU was also partly affected by a larger unit base following the rights issue it undertook to fund its recent acquisitions.

 

In FY21, there remains about 82.4 million units, making up about 15 per cent of its total units in issue, that are not entitled to distribution, compared to 192.4 million or 35 per cent of units that were not entitled in FY20.

 

Ms Wang said: " Doumen and Shunde (malls) are of very good quality and rental rates have significant growth potential over the next three to five years," she said.

 

" In FY21, with both assets reporting full-year contribution, coupled with interest savings when we refinance our existing loans, we are confident that our DPU will remain stable next year when the waiver expires. It won' t be a cliff drop," she added.

 

Since 2017, the gap between its DPU with and without distribution waiver has narrowed, with the latter on a steady uptrend until Covid-19 hit in 2020. This resulted in the manager having to dole out S$8.6 million in rental rebates to affected tenants.

 

In fact, the Greater Bay Area (GBA) where Dasin Retail Trust' s malls are located enjoyed an earlier recovery from Covid-19 compared to many other places.

 

Just as much of the world was going into lockdowns, shopping malls in the area were reopening from March 2020. Some 90 per cent of Dasin Retail Trust' s tenants had resumed business by March, with only KTV outlets, cinemas, enrichment centres and other leisure facilities such as gyms remaining closed, Ms Wang said.

 

From March to May, its malls also conducted retail livestreaming through WeChat, hosted by online influencers, to promote goods available at the malls to online consumers.

 

While SooChow CSSD Capital Markets (SCCM) has a " buy" call on the trust, DBS in early March downgraded its rating to " hold" . The brokerage was cautious that while the trust' s asset concentration in the GBA would enable it to tap on the region' s growth, growth in the GBA may be uneven and take time to spread to Zhongshan and Foshan where most of its malls are. It also expects the trust' s distribution waiver to dampen its DPU recovery.

 

Phillip Securities also downgraded the counter from " buy" to " accumulate" as it lowered the trust' s expected rental growth on weaker leasing, and cut its FY21 to FY24 DPU forecasts by 13 to 16 per cent.

 

Conversely, SCCM expects its FY21 DPU to grow by 42 per cent on the year from 3.94 cents in FY20 to 5.59 cents, fuelled by its newly acquired malls and the absence of one-off rental rebates in FY20. Dasin' s lease structure with a high fixed component (about 80 per cent of gross rental income) should also offer income stability, it believes.

 

As at April 5, Dasin Retail Trust was trading at a 12-month forward yield of 7.1 per cent, close to CapitaLand China Trust' s 7 per cent and below Sasseur Reit' s 8 per cent.

 

Ms Wang believes that acquiring the sponsor' s ROFR assets will be accretive to its DPU. The trust is also open to third-party assets, depending on their income, occupancies, property conditions and remaining lease.

 

" If they' re not up to par but there is growth potential, the sponsor may acquire them first, and they may only be injected into the trust when their performance has stabilised," she said.

 

Meanwhile there is also room for positive rental reversions from refurbishments at several of its malls, and plans to replace tenants taking up large floor areas such as furniture retailers and department stores with smaller, more lucrative businesses such as children-centric goods and services.

 

Leases in its portfolios are usually for three-plus-one years, and increments range from 3-5 per cent at mature locations such as Shiqi and Xiaolan, and 7-10 per cent at newer malls such as Doumen and Shunde.

 

Meanwhile, the e-commerce threat in China has waned since its peak in 2014-2015, as online platform fees and taxes have now nearly equalled occupancy costs of physical tenants, she said.

 

Ms Wang said a common question she gets asked is why Dasin Retail Trust is classified as a business trust instead of a real estate investment trust (Reit), given that it already adheres to many of the regulations that govern Reits, such as in its gearing limit (37.8 per cent as at end-2020) and development limit (0 per cent).

 

Some plans are underway for its conversion to a Reit, she said coyly. Together with its aim to double its market cap, she believes that this will improve investor demand for the Reit, especially among buyers with Reit-specific mandates.

DASIN Retail Trust' s revenue fell 7.5 per cent for the third quarter ended Sept 30, the trustee-manager said in a business update posted on Wednesday.

 

This was based on revenue in yuan, and excluded rental income recognised on a straight-line basis over the lease term.

 

The change was also calculated on the basis that revenue from Doumen Metro Mall, which was acquired in September last year, was excluded revenue from Shunde Metro Mall and Tanbei Metro Mall, both acquired in July this year, was also excluded from Q3 FY20 total revenue.

 

The trustee-manager said that Shiqi Metro Mall, Xiaolan Metro Mall, Dasin EColour and Doumen Metro Mall had returned to normal operating hours from Feb 24 Ocean Metro Mall did so on March 2.

 

All cinemas in the Trust' s portfolio have resumed operations the KTV outlets at Shiqi Metro Mall, Xiaolan Metro Mall, Dasin EColour and Ocean Metro Mall have also resumed operations.

 

The trustee-manager said it is granting eligible tenants rental rebates on a case-by-case basis while working with others to roll out marketing and promotional activities.

 

Separately, it is also in active negotiations with banks to refinance debt due in January next year. As at Sept 30, the Trust had S$425.4 million of onshore debt and S$78.6 million in offshore debt maturing in 2021.

 

Its gearing stood at 38.5 per cent, with the weighted average term to maturity being 4.9 years for onshore debt and 0.9 years for offshore debt.

 

Portfolio occupancy was 96.1 per cent.

 

About 4 per cent of the Trust' s gross rental income with pure turnover rent leases are expected to be most impacted by the Covid-19 outbreak, but the impact is gradually decreasing.

 

The trustee-manager said that the existing lease structures are " highly resistant" and that it will continue to optimise the tenant mix.

 

It added that uncertainties are expected in the short term, and the business environment remains challenging. It will continue to observe the situation and prepare for short-term challenges.