Dasin Retail Trust

[Shiyi]

The trust has paused dividends. Occupancy rate has fallen. In addition, it has obtained a further 6 months extension for some loans.

Given that a large proportion of Dasin's borrowings are offshore floating rate in SGD at 1.31-1.82% as of end 2021. However, in the latest report as of end June 2022, it has risen to 1.53-2.53% indicating a 75-100 basis points increase. (see page 21 and 22). I can confidently say that at present moment as the loan is pegged to a floating rate, it should be running up another 75-100 basis points. This means higher interest expense and hence cutting dividends to conserve cash. They will not switch to a china loan as China's interest rates is still two times higher than Singapore's

This is likely the end of the trust dividends and it has to start using all its cash to repay debts. Good luck to those invested. It is now a $0 stock

https://links.sgx.com/FileOpen/DASINRT-U...eID=728594

Its NTA is $1.25. It might be better for the trust to liquidate and distribute the money to shareholders.

[CY09]

I fully agree with you. Even a 20% discount of the property value, shareholders will earn double the current share price.

However, to the management, its equivalent to losing their job. Losing a SGD 250k- SGD 500k job is painful and they might not be able to find such a well paying job in China

[weijian]

It seems like the end of the road is very near.

APPOINTMENT OF ADVISOR TO CONDUCT INDEPENDENT BUSINESS REVIEW

The primarily purpose of the IBR is to assess and validate the financial position of the Group. These findings will be used as a basis to progress loan extension discussions with the various lenders of the Offshore Facility 1, Onshore Facility 1, Offshore Facility 2, Offshore Facility 3 as announced on 2 January 2023

https://links.sgx.com/FileOpen/DASINRT-A...eID=743603

Update of Status of Extension (2nd Jan 2023)
The Trustee-Manager wishes to update that discussions with lenders for the above facilities to extend
the loan maturity date to 30 April 2023 are progressing, albeit protracted.
https://links.sgx.com/FileOpen/DASINRT-E...eID=743083

[sgmystique]

It seems like the end of the road is very near.

APPOINTMENT OF ADVISOR TO CONDUCT INDEPENDENT BUSINESS REVIEW

The primarily purpose of the IBR is to assess and validate the financial position of the Group. These findings will be used as a basis to progress loan extension discussions with the various lenders of the Offshore Facility 1, Onshore Facility 1, Offshore Facility 2, Offshore Facility 3 as announced on 2 January 2023

https://links.sgx.com/FileOpen/DASINRT-A...eID=743603

Update of Status of Extension (2nd Jan 2023)
The Trustee-Manager wishes to update that discussions with lenders for the above facilities to extend
the loan maturity date to 30 April 2023 are progressing, albeit protracted.
https://links.sgx.com/FileOpen/DASINRT-E...eID=743083

Is the huge $1+ NAV all dud 

[CY09]

Unsure about this.

The current portfoilo on book is SGD $2.2 billion and equity of SGD 945 million. There has been no revalaution done by Dasin yet.

Based on the other distressed developers and property companies, we have seen properties forcesold at 50-90% of their reported value. Hence, there is likely some residual value left for sharheolders if a major sale occurs; but it is definite that the SGD $1 NAV wont hold. The market currently prices it as SGD $0.26 and I believe this is likely what remains of the asset value post strip off (if it is to happen).

However, as it continues to drag out, I feel the equity value will fall as the mgmt needs to pay themselves for (poorly) running the REIT. Hence, further dilution may occur

[weijian]

There is a good old saying that goes like this "When looking at the balance sheet, you can be sure that the asset is as fully valued as it can be, but the liability may not".

So when we look at impairment of the asset, it probably doesn't provide enough margin of safety. An assessment of the liability (or expecting unexpected off-balance liabilities to appear) is required.

The previous Eagle Hospitality Trust debacle have given observers a very good (FOC) lesson that was dearly paid by its equity holders. I am not insinuating anything similar here but trying to connect the broad lessons as a learner of how markets really work.

[weijian]

Since it will increase their firm's NPL and hence affect their bonuses, bankers don't issue LOD unless it is almost last resort. And how many times have we heard of "technical difficulties" from Chinese borrowers? Wash rinse repeat.

RECEIPT OF LETTER OF DEMAND

Pursuant to the last interest payment made by the Trust under the Luso Facility, the Trust was required to top up its reserve account with Luso Bank within 5 working days from the effective date of the Luso Facility. The Trust was unable to do so due to technical issues relating to the securing of approval from a China onshore lender/security agent for the remittance of funds from the Trust’s onshore RMB account.

https://links.sgx.com/FileOpen/DASINRT-A...eID=744546

[weijian]

A bad day of news for DRT minority shareholders - from gearing ratio breaches of offshore debt covenants (those offshore lenders are at the mercy of the debt holders of course), termination of anchor tenants and the unwelcomed result of a background check on the Sponsor (which took them so long?)

Preliminary property valuation:
https://links.sgx.com/FileOpen/DASINRT%2...eID=755679

Lease termination
https://links.sgx.com/FileOpen/DASINRT%2...eID=755839

Sponsor's background check
https://links.sgx.com/FileOpen/DASINRT%2...eID=755680

[weijian]

Is the huge $1+ NAV all dud 

Hi sgmystique,

I have no idea whether the NAV is dud or not. But I think Mr Market is quite good to gauge that. Of course, there are occasions when Mr Market could be wrong but I have observed that with the exception of a general crisis, Mr Market is probably right. So for this case, I reckon that the odds are with Mr Market and the escalation of unfavorable news just keep proving Mr Market to be right.

Actually the dead give-away was simply the continuous extension of its debt refinancing. Banks earn money by gving loans, so they are incentivized to do so. So why did they not do so? In other ways, the bankers have already done their due diligence on those assets and have shown us the results.

For assets selling below market valuation, the soundness of the assets are key and one can trace all the way back to its 2017 IPO when VBs sounded the alarm on this.

[CY09]

https://links.sgx.com/FileOpen/DASINRT-U...eID=764790

Revaluation has occurred and the new NAV is at $0.84 per share. However, I'm sure Dasin is not forthcoming in its latest valuation and more write downs will occur.

If an actual liqudation is to occur, further writedowns will occur. I personally think the REIT is worth a lot less than its NAV, however again the Chinese mgmt is dragging in order to milk more money out of OPMI. I hope a regulatory body takes note and forces a liqduation for capital distribution. The trust is still in positive equity, its just that as time passes the value falls because of the need to pay to the incomptent management.