Mapletree to defer cash distributions for at least two years

Mapletree Industrial Trust (MIT) is deferring cash distributions to investors for at least two years because of stricter covenants by banks.

The trust revealed this on Friday in a bid to address tenants’ demands for a reduction in rents.

MIT said its interest costs have doubled to S$23 million with the current credit crunch. It revealed that its shareholders have provided an additional S$140 million in capital to fund its purchase of industrial properties.

Last July, Mapletree bought a portfolio of high-rise industrial properties from JTC Corp for S$1.7 billion – about 60 per cent of that was funded by bank loans.

A group of Mapletree tenants had twice petitioned for the trust to cut its rents because of the tough economic climate.

They had contended that they would have benefited from the 40 per cent property tax rebate given out by the government in January, plus another 15 per cent offered by JTC Corp for its tenants.

But Mapletree had rejected the appeals, saying it too faced business constraints. It added that it would find other ways to help its tenants.

The trust said if it gave in to its tenants’ request, the trust would risk defaulting on its loan taken out for the purchase of the JTC portfolio.

Source : Channel NewsAsia – 13 Mar 2009

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