Chinese mall landlord Dasin Retail Trust has received a letter from Macau’s Luso Bank declaring a default after the Singapore-listed REIT failed to make an interest payment on a $13.1 million loan facility.
Pursuant to the last interest payment made under the facility, the trust was required to top up its reserve account with Luso Bank within five working days from the effective date of the facility, the trust’s manager said Thursday in a filing with the Singapore Exchange.
“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,” said Wang Qiu, CEO of the manager.
Luso Bank issued a statutory demand letter to the manager dated 10 January declaring an event of default under the facility agreement and demanding payment of all principal and interest owed. The manager is seeking legal advice in relation to its obligations under the loan facility, it said.
Extending the Extensions
The default announcement comes 10 days after Dasin Retail Trust disclosed that it had tapped a financial advisor, FTI Consulting, to “assess and validate the financial position” of the REIT and its subsidiaries.
On 2 January, the trust’s manager revealed that it had asked lenders for an additional extension on the repayment of debt after it failed to make good on earlier extensions that obligated it to repay S$670.8 million (now $507 million) in offshore debt and RMB 400 million (now $59 million) in onshore loans by 31 December.
Sponsored by developer Zhongshan Dasin Real Estate, which is based in the city of Zhongshan in Guangdong province, the REIT has secured a series of loan extensions on its onshore and offshore debts since 2021, sending its stock price into a freefall.
In September of last year, the trust won a three-month extension on a portion of its debt six months after the manager had revealed a non-binding memorandum of understanding to sell its most valuable malls — Xiaolan Metro and Shiqi Metro, worth a combined RMB 4.7 billion — to Wuhu Yuanche Bisheng Investment Center.
The supposed purchaser was a buyout fund co-managed by one of its substantial unitholders, Beijing-based private equity firm Sino-Ocean Capital Holding, but no updates regarding the potential transaction have been provided.
The trust’s manager said Thursday that it continues to negotiate with lenders as it seeks to delay repayment of three sets of loans to 30 April.
Those debts include the S$430 million in offshore facilities and RMB 400 million in local debt that the trust borrowed in 2017 to finance its acquisition of its initial four malls in Guangdong’s Zhongshan.
It is also overdue to repay S$134.2 million borrowed offshore in 2020 to finance the acquisition of another two Guangdong malls — one each in Foshan and Zhongshan — and S$106.61 million in offshore facilities borrowed to finance its 2019 acquisition of a mall in the Zhuhai area.