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Hyflux unit makes up 6.8% of rental income for ESR-Reit as at end-Q1
A UNIT of beleaguered water treatment firm Hyflux is a tenant at ESR Real Estate Investment Trust (ESR-Reit)'s property at 8 Tuas South Lane. But the Reit manager said in a Singapore Exchange announcement that it will likely continue to make rent throughout the reorganisation process.
Hyflux Membrane Manufacturing (S) represented 6.8 per cent of the rental income of ESR-Reit as at Mar 31, 2018.
It is one of the five subsidiaries that together with Hyflux has applied to the High Court of the Republic of Singapore to commence a court-supervised process to reorganise their liabilities and businesses.
"8 Tuas South Lane is currently leased to Hyflux Membrane on two different lease terms, which lends itself well to be multi-tenanted," said ESR-Reit's manager, which has on average three months security deposits for the two leases.
All rental payments by Hyflux Membrane have been prompt since the property was acquired in December 2017 and there are currently no arrears due from Hyflux Membrane.
ESR-Reit's manager believes that rental payments will continue throughout the reorganisation process as the property is essential to the continued operations of Hyflux Group's business, from discussions with Hyflux's management and its financial advisers.
ESR-Reit's manager also said that it has been receiving leasing interest and inquiries due to 8 Tuas South Lane's location next to the Tuas Megaport and within an established industrial area.
In October 2017, ESR-Reit entered into an option agreement with Hyflux for the sale and leaseback of the Tuas South property, at an estimated cost of S$111 million.
Trading of Hyflux is suspended. ESR-Reit units closed unchanged at S$0.51.