REIT Oracle

Lippo Karawaci Wants Lease Renegociation With First REIT

While it sounds counter-intuitive, the Covid-19 pandemic has been hurting the health care sector as many non-pandemic related procedures and treatments have been delayed or outright cancelled. The Lippo Karawaci group (LPKR) has announced its desire to renegociate its leases with First REIT over its Siloam hospitals:

Under the current lease structure, the healthcare real estate investment trust (Reit) is guaranteed a certain rent level, which means any decline in Siloam's revenue increases the "significant" rental support that First Reit will receive, LPKR said.

On Monday afternoon, the Reit manager clarified that it has not been approached by LPKR regarding these matters.

Ascott REIT Will Not Call It's Perpetual Bond

Ascott REIT has announced it will not call it's perpetual bond on 30 June 2020, its first call date. While the call is entirely optional, REITs (and banks) traditionally call their perpetual bonds on their first call date.

The hospitality trust, which deals with the sharp fall in business due to the Covid-19 pandemic, would face a difficult market if it tried to refinance the issue. On the other hand, the bond which bears a 4.68% interest rate, will reset to 2.5% plus Swap Rate on the call date, which would save the trust some interest payments.

Eagle Hospitality Will Pay for Sponsor's Liabilities Using Distribution Funds

In order to preserve the condition and value of its properties, Eagle Hospitality Trust (EHT) is having to use the funds originally meant for distribution to unit holders:

This is in light of the "continuing failure" by the trust sponsor and master lessee Urban Commons to discharge its obligations under the Master Lease Agreements (MLAs), EHT said in a filing to the Singapore Exchange on Wednesday night (May 27).

EHT urgently needs to protect and safeguard the asset value of its portfolio, it said. "There is currently no alternative source of monies to fund the portfolio preservation expenses other than the monies originally intended to fund the distribution and the remaining security deposits."

Hektar Seeks Private Placement

Facing the disruption of the Covid-19 pandemic, Malaysian retail trust Hektar REIT is seeking the approval to issue up to 5% more units through a private placement:

The Proposed Private Placement will mainly allow Hektar REIT to raise the necessary funds for working capital and capital work in progress to help to facilitate Hektar REIT's existing day-to-day operations as a whole by providing more flexibility in terms of cash flow management.

While reducing the gearing level, the operation would dilute NAV and yield for existing shareholders. Timeframe for completion is indicated to be the second half of 2020.

The trust also decided to defer dividend distribution for Q1 2020.

"Prejudicial" Interested-Person Transactions Found at Eagle Hospitality Trust

The Business Times reports on findings from a review of Eagle Hospitality Trust situation:

Embattled Eagle Hospitality Trust (EHT) has uncovered fresh sets of interested-person transactions that the audit and risk committee has found not to be on usual commercial terms.

The inking of these transactions, which comprise agreements between two sponsor directors and master lessees involved in the trust’s hotel assets, is thus prejudicial to the interests of EHT and its minority stapled security holders, the managers disclosed in a filing late on Friday night.

The trust has also just released its Q1 2020 results.

Name Change for Frasers Logistics

Effective May 4, 2020, Frasers Logistics & Industrial Trust will be renamed Frasers Logistics & Commercial Trust to reflect its merger with Frasers Commercial Trust.

Cache Logistics Becomes ARA LOGOS

In order to better reflect its two major backers, Cache Logistics Trust is being renamed to ARA LOGOS Logistics Trust, with effect from 28 April 2020.

More Troubles for Eagle Hospitality

When it rains it pours as a the saying goes, and so does Eagle Hospitality REIT gets more bad news:

Under a US$35 million (S$49.9 million) mortgage loan, the lender Wells Fargo National Association sent an April 18 notice identifying multiple events of default. Wells Fargo had provided the loan on May 21, 2019, in respect of Delta Hotels by Marriott Woodbridge, one of EHT's 18 hotels.

But there's more:

Meanwhile, the master lessees - under EHT sponsor Urban Commons - for 16 out of EHT's 18 hotels have received notices of default from the relevant hotel managers under their hotel management agreements (HMAs).

In addition, of the 16, five hotel managers have also sent termination notices dated April 16 to the respective master lessees under their HMAs, after the master lessees failed to cure their default of maintaining sufficient working capital for the hotels' operations.

Eagle Hospitality Trust Creditors Block Bank Accounts

The Business Times reports of more complications for Eagle Hospitality Trust following the notice of default served to the REIT by some of its creditors.

The syndicate of lenders for Eagle Hospitality Trust’s (EHT) US$341 million loan has restricted access to several bank accounts of Eagle Hospitality Real Estate Investment Trust’s (EH-Reit) subsidiaries and the Reit's master lessees.

This action has caught the attention of the Singapore stock exchange (SGX) and the Monetary Authority of Singapore (MAS):

The Monetary Authority of Singapore (MAS) has directed the manager of Eagle Hospitality Real Estate Investment Trust (EH-Reit) and its trustee, DBS Trustee, to take steps to protect the rights and interests of EH-Reit's unitholders.

MAS and the regulatory arm of the local bourse, Singapore Exchange Regulation (SGX RegCo), are also looking into possible breaches of relevant laws and regulations, as well as of listing rules in relation to the issues surrounding the Reit.

Singapore Relaxes REIT Regulation to Help With Covid-19 Crisis

The Monetary Authority of Singapore (MAS) and Singapore's Ministry of Finance have announced several exceptional measures to help the local REITs better cope with the current challenging environment that the Covid-19 pandemic has created.

• REITs will be granted more time to distribute the 90% of income they are required to pay out, from the current 3 months up to 12 months. This will grant them more flexibility in managing cash flows.

• Maximum leverage will be increased from the current 45% up to 50%. This was expected to be introduced along with a requirement for a minimum Interest Coverage Ratio of 2.5, but that requirement is now being deferred.