SINGAPORE (Apr 17): The managers of AIMS APAC REIT (AA REIT), Cache Logistics Trust (Cache) and Mapletree Logistics (MLT) announced separately on Tuesday night that CWT has so far not defaulted on its rental payments under their respective lease agreements.
CWT is a tenant of properties at 20 Gul Way and 30 Tuas West Road which are managed by AA REIT.
In its regulatory filing, AIMS APAC REIT Management says AA REIT presently holds security deposits ranging from three to six months of rental in the form of bank guarantees amounting to some $4.5 million.
In addition, AA REIT’s exposure to CWT's leases will be further reduced due to the expiry of the lease agreements, with the final lease expiring in July 2021.
Based on AA REIT’s 3Q19 gross rental income, some 5.1% of AA REIT’s gross rental income from CWT will progressively expire in the current financial year ending Mar 31, 2020. In 3Q19, the gross rental income received from CWT's leases represented 8.4% of AA REIT’s gross rental income.
In a separate filing, ARA Trust Management (ARA), the manager of Cache, says CWT has also not defaulted in its rental payments under the various lease agreements and there are no arrears due as of Tuesday.
CWT is a tenant of Cache’s CWT Commodity Hub and Pandan Logistics Hub.
Manager ARA says it holds an average of some three months security deposit in relation to the leases with CWT.
In addition, there are underlying end-users in relation to each of CWT’s leases which Cache is fully aware of and has engaged with over time, adds ARA.
“In light of the expiry of CWT’s leases, the manager is in a position to negotiate with the end-users as well as other prospective tenants to maintain occupancy and preserve the continuity of rental income from the property by way of directly contracting with Cache,” says ARA.
As at April 16, CWT contributes to 16.5% to the gross rental income of Cache, down from 20.6% as at Dec 31. The weighted average lease to expiry of the CWT leases is less than one year by GRI.
Similarly, Mapletree Logistics Trust Management (MLTM) put out a filing saying CWT is a top tenant of MLT with a revenue contribution of 9.1% for the 3Q ended Dec 31.
The five properties leased to CWT are 5A Toh Guan Road East, 4 Pandan Avenue, 6 Fishery Port Road, 38 Tanjong Penjuru and 52 Tanjong Penjuru.
The manager says CWT has not defaulted on its rental payments under the various lease agreements with MLT and there are no arrears due from CWT as of Tuesday.
In addition, MLT holds security deposits of six months of rental in relation to the leases with CWT.
AIMS APAC REIT Management. ARA and MLTM were responding to an announcement by Hongkong-listed CWT International (CWTI) that the group failed to pay accrued accrued interests and fees to lenders totalling HK$63 million ($10.9 million) which have become due and payable under a HK$1.4 billion facility.
See: HK-listed CWT International defaults on loan interests and fees; 3 CWT-linked REITs could be hit
CWTI is controlled by Chinese conglomerate HNA Group which is facing liquidity challenges and owns 100% of CWT.
As a default has occurred under the facility agreement, the lenders have declared that all amounts accrued or outstanding under the facility agreement be immediately due and payable, and that the security relating to the facility agreement has become enforceable.
The security pledged against the HK$1.4 billion facility -- including 100% of CWT, HK$1.2 billion worth of UK properties, US investment properties and golf courses in China -- are also enforceable.
AA REIT closed 2 cents lower at $1.39 while Cache closed 4 cents lower at 71.5 cents and MLT closed 6 cents lower at $1.42 on Tuesday.
