Saizen – BT

Saizen to resume payouts in Q4 FY’10

It posts 19% fall in distributable income to 1.37 billion yen for FY2009

SAIZEN Real Estate Investment Trust (Reit), which has suspended distribution of income for the financial year ended June 30, 2009 (FY2009) to conserve cash, said that it aims to resume distribution from the last quarter of FY2010 or the first quarter of FY2011.

This comment came in its financial report for FY2009, which saw it posting a 19 per cent fall in distributable income to 1.37 billion yen (S$20.37 million).

Its net property income, however, grew 17.2 per cent to 2.9 billion yen as it recognised contributions from 166 properties for the full fiscal year. In fiscal 2008, some 65 properties were added gradually across the year.

Saizen also completed its divestment of UI Building for 274.68 million yen yesterday.

‘While the real estate transaction market is expected to remain difficult, the management team expects property operations to be stable in the coming financial year,’ the trust said in its financial statement.

It noted that property operations in the regional mass residential market that it operates in have not been adversely affected, while occupancy rate and rental reversions are expected to be stable with proactive management.

The Reit, which has suspended distribution payments since its fiscal second quarter, said that the decision to stall paying out distribution was made after careful consideration of the credit situation.

‘The board endeavours to resume distribution as soon as the financial position of Saizen Reit allows,’ it said.

It noted that the availability of financing continues to be limited, citing a Fitch Ratings report in April, which projected a surge in default rate on commercial mortgage-backed securities (CMBS). All of its 14.9 billion yen loans are funded by CMBS.

The trust will use its operational cashflow, proceeds from its $41.3 million rights issue and short-term bridging loan of 400 million yen to repay the loans of YK Kokkei, YK Shingen and YK Keizan that are due in November 2009, December 2009 and January 2010 respectively.

Thereafter, it will use its operational cashflow to repay the short-term bridging loan as soon as possible, given its high interest costs. After these repayments, cashflow from operations will be distributed to unitholders, Saizen Reit said.

It had earlier proposed to pay dividends for its second fiscal quarter in Reit units instead of cash, but abandoned the scrip-only plan after talks with the Singapore Exchange.