Dasin Retail Trust ("DRT") found itself currently in hot soup when one of its bankers, through its lawyers, issued a statutory demand letter to its management. The demand letter dated 10 January 2023 declared that DRT is openly in default of the facility agreement entered into on 15 December 2022 for USD13.1Mil. This first firing of shot by Luso International Banking Limited may complicate the syndicated loan extension by other banks (yes, DRT has already applied for numerous extension of its syndicated loans as it has been unable to repay the debt) and sent DRT into an upcoming forced liquidation and fire-sales of all its investment properties.
What on earth is happening to DRT with its endless pleas to bankers for loan extension?
The syndicated bankers are not willing to continue lending to DRT unless they do a partial repayment of the total sum to pare down on debt level. DRT management thus have been struggling to find a way to raise capital to reduce part of its debt in order to keep their bankers happy and ink a deal for long term loan renewal instead of the current knives being dangled at its neck with a short 3 months to 6 months of extension.
The syndicated bankers are not willing to continue lending to DRT unless they do a partial repayment of the total sum to pare down on debt level. DRT management thus have been struggling to find a way to raise capital to reduce part of its debt in order to keep their bankers happy and ink a deal for long term loan renewal instead of the current knives being dangled at its neck with a short 3 months to 6 months of extension.
The recent trouble with Luso Bank seems to suggest that the actual cashflow of DRT is not as healthy as it seems. Back during the half year results release, DRT did not declare any distributions by giving the reason that it needs to be prudent on cashflow in view of continued uncertainties arising from COVID-19 situation in China. Apparently, its business operations situation must have worsened in its 2nd half of the financial year.
Parting Thoughts
I am glad that I have sold off all my DRT units by end of August 2022 as I had enough of the poor management as well as a lack of transparency and timely release of pertinent information. Personally, I am very skeptical of the Net Asset Value of S$1.25 per unit reported by DRT as at 30 June 2022 in consideration of worsening future cashflow from its business operations and higher present value discount rate in view of higher interest rate environment. As at 20 January 2023, its price has declined 6% from a day earlier and is trading at S$0.230 per unit after the release of the news.
For all we know, DRT units may well be already worthless especially in the event that its investment properties fair value needs to be adjusted by more than 50%. An upcoming fire-sales is the perfect storm that DRT need to watch out.
(P.S: Please also see my previous post: "Dasin Retail Trust And Investors In Trouble- Loss of S$56.4 Mil for 1st Half of 2022 And No Distribution Being Paid Out Red Flag")
I held dasin from early 2018 and sold it in dec 2019. Looking back, I was glad I sold it just right before COVID became a real thing. There was an incident that made me a little uncomfortable about holding the REIT. I was trying to find out the date of their quarterly financial reporting and I was not able to find it anywhere on their website. Then suddenly they just announced their financial report. I remember turning to my wife and shrugged my shoulder " Can like that one ah? Happily just announce without informing investors in advance". It could also be my own oversight that I didnt search through their website thoroughly enough. Nevertheless, it's definitely a blessing in disguise.
ReplyDeleteHi Bro Happy RI, Happy Lunar New Year to you! A blessing in disguise in deed that you sensed something wrong then and decided to exit. I took a calculated risk when I went in last year (2022) thinking it has been oversold. The non-paying of distribution and lack of timely info release became the last straw for me.
DeleteI only buy CLCT for China exposure. The rest don't dare to buy
ReplyDeleteHi Bro Henry, wishing you prosperity and good health always in the year of the Rabbit! Huat Ar!
DeleteThese China listed businesses are extremely risky indeed.
Same here....I also invested into CLCT since it has the might of Temasek Holdings behind it and CapitaLand has a long track record of operating in China already. :)