Dasin Retail Trust reports H2 net loss of S$221.5 million; Sias queries board on financials
Tessa Oh &
Michelle Zhu
DASIN Retail Trust ’s (DRT) net loss for the second half ended December 2022 widened to S$221.5 million from S$51.8 million in the same period a year ago, statements prepared on a going concern basis indicated.
On Monday (Jul 10), its trustee-manager said the greater net loss was mainly due to changes in fair value of investment properties, which resulted in a wider S$297.9 million loss from S$63.9 million in the previous year.
The latest set of results translates to a loss per unit (LPU) of S$0.273 compared to a H2 LPU of S$0.0661 the previous year. LPU for FY2022 amounted to S$0.3455, compared to an LPU of S$0.0626 the previous year.
Revenue over the half-year period declined 24.7 per cent to S$37.6 million from S$50 million in H2 FY2021. The lower topline comes amid lower contributions from all malls in the trust’s portfolio, which comprises seven retail malls providing direct exposure to the Guangdong-Hong Kong-Macau Greater Bay Area.
Net property income (NPI) fell 33.6 per cent to S$20.6 million from S$31 million in the previous comparative year.
No distribution has been declared for the period, as the trust has defaulted on loans worth approximately S$910 million.
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Following the release of the results, minority investor advocacy group Securities Investors Association (Singapore), or Sias, issued a set of questions to DRT relating to unitholders’ concerns over the results, among other matters.
Regarding the loan defaults, Sias asked the trust to explain to its unitholders the hurdles it faces in disposing some of its assets to deleverage and address the defaults. It also requested the trustee-manager to provide an on-the-ground update on the operating statuses of DRT’s seven malls in Guangzhou.
In relation to the fair value changes in DRT’s investment properties, Sias noted that the trust is now in breach of the gearing, interest-coverage and loan-to-valuation ratios required under its offshore facilities. It asked the trust to elaborate on how this would impact the refinancing of both the offshore and onshore facilities, as well as the progress that has been made in this area.
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DRT’s full-year revenue was down 15.8 per cent to S$85.3 million from S$101.3 million in FY2021.
FY2022 NPI stood at S$47.2 million, down some 31.8 per cent from S$69.2 million the previous year.
NPI margin fell 13.1 percentage points to 55.2 per cent for FY2022, compared to 68.3 per cent previously. The trustee-manager said this was primarily due to a loss allowance on receivables, excluding which would have seen NPI margin at 75.6 per cent.
In its outlook, DRT’s trustee-manager acknowledged there were material uncertainties over the trust’s ability to remit funds out of China for the payment of interest expenses for two of its offshore facilities, as well as essential offshore operating business expenses, over the next 12 months.
It cautioned there could be an impact on the classifications of its assets and liabilities – along with the ability to realise assets at their recognised values, and extinguish liabilities at the amounts stated in the financial statements – should the trust be unable to continue as a going concern.
As at end-2022, DRT’s total liabilities at the group level stood at S$1.3 billion, compared to S$1.4 billion in the same period a year ago.
In addition to its questions on the latest results, Sias asked DRT to provide an update on the proposed sale of Shiqi Metro Mall and Xiaolan Metro Mall, as well as that of any other assets.
It also asked the trust to clearly define the roles and responsibilities of its management team, including those of chief executive of the trustee-manager Wang Qiu and chief financial officer Steven Ng. It queried the trust on the board’s level of involvement in operational and strategic matters, as well as how effective the trustee-manager has been in handling matters of the trust – especially in relation to the winding-up petition against Sino Ocean Capital in Hong Kong.
Earlier this month, DRT announced that talks with a “reputable Chinese entity” over a memorandum of understanding (MOU) had fallen through; the MOU was related to the trust’s restructuring of its loan maturities. Sias has asked DRT to state all the options that are being explored in its restructuring, including details on the individuals who are leading the negotiations, the assets involved, and the counter-parties.
The group also noted that some unitholders have expressed concerns regarding the potential illegality of the transactions outlined in the MOU. It has therefore requested DRT’s board and management to provide clarity on the transactions in question, and the potential laws that might be breached.
Units of DRT closed 1.6 per cent or S$0.002 lower at S$0.12 on Monday.
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