BEVERAGES conglomerate and Heineken brewer Fraser and Neave has bought out Allco Finance Group's Singapore real estate business for $S180 million ($A138 million).
The acquisition was made through F&N’s wholly-owned subsidiary, Frasers Centrepoint Limited.
Under the agreement, FCL will buy buyout the Allco (Singapore) Limited, the manager of the Singapore stock exchange listed Allco Commercial REIT as well as snap up 17.7% interest (125,651,319 units) of the outstanding units in the trust.
Listed in March 2006, Allco REIT currently has nine commercial properties with a total value of $S2.04 billion and $S916.9 million in borrowings. The assets are China Square Central; 55 Market Street and KeyPoint in Singapore; Cosmo Plaza, Osaka, Galleria Otemae Building, Osaka, Azabu Aco Building, Tokyo and Ebara Techno-Serve Headquarters Building, Tokyo in Japan; and 50.0% stakes in each of Central Park, Perth and Centrelink Headquarters, Canberra in Australia.
In addition, the trust has a 20.6% stake in Allco Wholesale Property Fund managed by Record Funds Management Limited, an affiliate of Allco.
FCL’s chief executive Lim Ee Seng said the trust will be renamed Frasers Commercial Trust, and it will be the vehicle through which FCL will further its commercial property activities.
“We have clear plans to bolster and strengthen the financial position of Allco REIT… we will be able to assist Allco REIT in negotiating the refinancing of its existing loans, which will bring clear benefits to Allco REIT’s unit holders,” Lim added.
Under FCL’s management, Allco REIT is set to grow by leveraging on a ready pipeline of assets comprising $S700 million worth of quality commercial assets owned by FCL in
“We have outlined a plan to establish three REITs in the retail, commercial and hospitality sectors. Frasers Centrepoint Trust, our Retail REIT was listed in 2006. This acquisition will deliver on our plan for a Commercial REIT. We intend to list our third REIT for our serviced residence assets in the next two to three years, subject to prevailing market conditions.” he continued.
The sale will generate proceeds in excess of $90 million, after repaying loans associated with the investment for Allco. The proceeds will be used to further reduce Allco’s senior debt as well as providing Allco with further operating liquidity.
Allco’s managing director and chief executive David Clarke said it was an excellent result for a business that is less than three years old.
“The sale releases a significant amount of cash, which will be directed towards lowering group debt and providing additional operating cash to support Allco’s core business activities.
“This sale, combined with other recent asset sales, means Allco has significantly progressed its restructuring plans to a refocused strategy built around our core capabilities of sourcing and managing aviation, shipping and rail assets, managing the funds that own those assets and private equity,” he continued.
Clarke said with Allco’s primary focus now on its core capabilities, the group has appointed JPMorgan to conduct a strategic review of its remaining property funds management activities.
Meanwhile, FCL did not indicate whether it will continue to pursue Allco REIT divestment proposal. In March this year, Allco REIT announced plans to sell off interests in several assets.
An independent valuation of Cosmo Plaza, Osaka, as at June 30 2008 was been completed and has been valued at JPY 5.998 billion, which is 8.7% below the previous valuation of JPY6.57 billion as at May 39 2007; and a valuation of Centrelink Headquarters, Canberra showed $A187.5 million, which is 13.8% below the average of the previous valuations of $A217.5 million obtained in May 2007.
AFG shares rose 1.5 cents higher to close at 36 cents yesterday.
Australian Property Journal
