Market's view on Regional Reit
Published on April 2024
- There is a discussion about DGI9’s management by an external manager, and the performance is not completely satisfactory.
- Some watchers are questioning the potential of new management to perform worse than the current one.
- Concerns are raised about the feasibility of a retail bond not defaulting, although the risk is considered low with its maturity approaching.
- Opinions differ on the necessity of new equity and the need to address senior debt in the near future, focusing on property disposals to manage debt and equity levels.
- The retail bond price is believed to be influenced by market supply and demand with expectations around roll-over, repayment balance, and new equity.
- There is speculation about potential bridge financing with low teen returns being considered for temporary solutions pending sales receipts.
- Challenges in refinancing due to new lenders requiring comfort on senior lenders’ inability to disrupt cash flows are noted.
- The use of unrestricted cash and sales proceeds might be restricted due to loan documentation and LTV considerations, potentially leading to complications in bond repayment.
- Some watchers express a more optimistic outlook, suggesting that significant property sales could facilitate bond repayments without defaulting.
- Concerns are voiced about the company’s management decisions, particularly the payout of dividends, which could have placed unnecessary strain on the company’s financial position.
- The potential for administration if the retail bond defaults is discussed, emphasizing the impact on unsecured lenders and the need for a cooperative solution between secured and unsecured lenders.