AllCo – SGX
ALLCO REIT TO ACQUIRE AN ADDITIONAL THREE PROPERTIES IN JAPAN
Key Highlights
Acquisition of two high quality commercial properties in Tokyo and one in Osaka
Increased presence in Asia
Immediately accretive to Allco REIT’s distribution per unit
Singapore, 14 September 2007 – Allco Commercial Real Estate Investment Trust (“Allco
REIT”) (SGX:ALLC) today announced that it will acquire a 100% interest in three properties in Japan (collectively the “Properties”) for a total purchase price of ¥11.65 billion1 (S$153.05 million)2 at a discount to independent valuation.
Mr Nicholas McGrath, Chief Executive Officer and Managing Director of Allco (Singapore) Limited, manager of Allco REIT, said, “These acquisitions are consistent with our investment strategy of acquiring well-located, yield accretive assets in our target markets.”
Japanese property assets will represent 16.4% of Allco REIT’s total property assets upon completion4. The Properties will improve the quality and diversification of Allco REIT’s income.
The acquisitions are in line with Allco REIT’s regional growth strategy and continue to diversify its portfolio of assets within Asia.
“We are particularly pleased to be entering the Tokyo market and increasing our exposure to the commercial property market in Osaka. It is expected that these markets will continue to benefit from increased rentals and capital appreciation.”
The acquisitions of the Properties will be funded entirely by debt. The weighted average cost of debt funding for the acquisition of the Properties will be 2.09% and will be fixed for five years.
Following completion of the acquisitions, Allco REIT’s leverage (calculated as gross borrowings plus deferred payments divided by total assets) is expected to increase from 25.1% to approximately 33.5%, which is within the aggregate leverage limit as set out in the guidelines for real estate investment trusts in Appendix 2 of the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore (“Property Funds Guidelines”). Allco REIT has an investment grade credit rating from Moody’s Investor Services Inc. which, under the Property Funds Guidelines, permits gearing of up to 60.0%.
“Debt continues to be readily accessible for Allco REIT, with lenders supportive of Allco REIT’s strategy. We have seen a reduction in Yen-denominated debt costs since our previous Japanese acquisition a month ago in Osaka.” Mr McGrath said.
1 References to purchase consideration in this release exclude expenses associated with the acquisitions and consumption tax.
2 The exchange rate used in this release is S$1.00:¥76.1198.
4 Represented by the aggregate appraised value as a percentage of the sum of total property investments held and valued as at 30 June 2007, the aggregate appraised value and the valuation of Cosmo Plaza as at 30 May 2007.
Source : SGX