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Dasin Retail Trust Q3 DPU falls 5.5%; to buy 2 Chinese malls from sponsor, chairman

DASIN Retail Trust, which holds five malls in China, on Wednesday posted a 5.5 per cent drop in distribution per unit (DPU) to 1.71 Singapore cents for its third quarter, down from 1.81 cents a year ago.

This took into account 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 three months ended Sept 30 rose 2.5 per cent to 0.98 Singapore cents, up from 0.95 cents a year ago.

Dasin Retail Trust completed a private placement of 82.4 million new units on Sept 12, raising S$68.8 million.

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Revenue increased by 3.4 per cent to S$18.7 million for the third quarter from S$18.1 million in the corresponding period last year.

This was mainly due to the September acquisition of Doumen Metro Mall, which contributed some S$1 million in revenue, as well as the S$200,000 increase in rental income from Ocean Metro Mall.

The higher revenue was partially offset by the weakening of the Chinese yuan against the Singapore dollar.

Net property income (NPI) edged up by 1.8 per cent to S$14.8 million for the quarter, from S$14.5 million.

Distributable amount grew 6.8 per cent on the year to S$5.7 million from S$5.3 million.

In a separate bourse filing on Wednesday morning, the trust also announced that it is proposing to buy two malls in China’s Guangdong province from its sponsor Zhongshan Dasin Real Estate and its trustee-manager’s chairman, Zhang Zhencheng.

On behalf of the trust, the trustee-manager entered into a sale and purchase agreement for the proposed acquisitions of Shunde Metro Mall in Foshan city and Tanbei Metro Mall in Zhongshan city via the purchase of the entire equity interests in Singapore holding companies.

The total acquisition cost is estimated to be S$333 million, subject to post-completion adjustments.

This comprises the share purchase consideration of S$65.1 million payable to Mr Zhang, the repayment of existing debts of S$247.8 million, an acquisition fee of S$2.4 million in units to the trustee-manager, and acquisition-related fees of about S$17.7 million.

The trustee-manager plans to finance the acquisition with a mix of debt and equity financing as well as internal funding. The debt financing will be in the form of a drawdown from debt facilities to be made available to the trust from commercial lenders.

For the equity financing, the trust proposes to issue up to 120 million new units at an illustrative issue price of S$0.82 apiece to raise about S$98.4 million.

The acquisitions of the two malls constitute interested person transactions under listing rules.

The nine-storey Shunde mall began operations in November 2018 and has a gross floor area (GFA) of 177,276 square metres (sq m). Its agreed property value, negotiated on a willing-buyer and willing-seller basis, is about 1.9 billion yuan (S$364.3 million). This is at a 25 per cent discount to the independent valuations by D&P and JLL, which were both around 2.5 billion yuan.

Meanwhile, the four-storey Tanbei mall started operations in March 2018 and has a GFA of 13,640 sq m. Its agreed property value is 55.6 million yuan, which is at a discount of 23.8 per cent and 26.5 per cent to the independent valuations of 73 million yuan and 75.6 million yuan respectively.

The malls are each held by a China holding company previously owned by Zhongshan Dasin Management and Investment (ZDMI). The Shunde property’s rental management firm was also wholly owned by a ZDMI subsidiary. Mr Zhang acquired the Shunde property’s holding company and rental management firm on Oct 9 and Sept 30 respectively, for a total consideration of about 57.7 million yuan. He also acquired the Tanbei mall’s holding company from ZDMI for 48 million yuan on Sept 29.

ZDMI is wholly owned by three individuals: Zhang Zhongming, deputy chairman of the trustee-manager who is chairman Mr Zhang Zhencheng’s nephew; as well as Zhang Kaicheng and Zhang Jiucheng, who are Mr Zhang Zhencheng’s siblings.

The acquisitions of the malls constitute interested person transactions under listing rules.

Units of Dasin Retail Trust closed flat at 83.5 Singapore cents on Tuesday.