Hysan trims debt after flats sales, portfolio sell-off
Property investment company Hysan Development has reduced its net debt by 25 per cent to $6.2 billion, easing widespread concerns over its financial position, according to DBS Securities.
The firm achieved the reduction by selling the 55 units at Broadwood Park near Happy Valley and all 74 units at No 3 Garden Terrace in Mid-Levels, as well as offloading half its treasury portfolio, the brokerage said.
DBS expected the company's $1.6 billion rental revenue and proceeds generated from property sales to be more than enough to repay a $1 billion loan due to mature this year.
Hysan said previously it generated more than $1.52 billion in net cash proceeds from the sale of investment properties last year.
The brokerage said, however, it would cut its full-year earnings forecast by 4 per cent to $1.26 billion for the year to December 31, against $900.38 million the company earned last year.
The downward revision was due to a larger percentage of leases due for renewal and lower occupancy rates at its investment properties, it said.
DBS expected about 25 per cent of Hysan's rental portfolio was due for renewal this year and 50 per cent next year.
It said some of Hysan's tenants might want to renew leases earlier to capitalise on low rents.
Hysan's occupancy rates are 88 per cent for its office and residential properties and 95 per cent for its retail properties, down 4 per cent from two months ago.
DBS forecast the overall occupancy rate would fall to 86 per cent this year due to fierce competition.
Hysan's net asset value as of December 31 last year was $18.19, down 40.03 per cent from the previous year as a result of an $18 billion decline on the revaluation of its property portfolio.