AllCo – BT

Allco Reit could divest its Aussie assets

ALLCO Commercial Real Estate Investment Trust (Allco Reit) could divest its interest in its Australian properties which are currently valued at A$482.9 million (S$619.3 million).

This includes its 50 per cent interests in Central Park in Perth and Centrelink Headquarters in Canberra. Allco Reit is also invested in Allco Wholesale Property Fund which in turn has interests in several properties in Sydney.

In a statement released on Sunday, the Reit manager, Allco Singapore, said: ‘In the ordinary course of managing the business of Allco Reit, the manager continually evaluates its purchase, hold and divestment options in respect of its assets with a view to maximising unitholder value.’

The statement was released after Australian media got wind of the potential divestment and reported it on Friday.

When contacted, Allco Singapore chief executive and managing director Nicholas McGrath reiterated statements made in its press release that Allco Reit has not entered into any ‘binding arrangements with respect to the sale of any of these properties’.

If the divestment takes place, Mr McGrath said, the capital would be redeployed to higher-growth areas in Singapore and other Asian cities.

He also said that some of this capital could go towards reducing its leverage and repay debts.

Apart from Singapore, Allco Reit has assets in Osaka and Tokyo.

Its three key properties – China Square Central and 55 Market Street in Singapore, and Central Park in Perth – had a combined value at the end of December of $1.13 billion, based on the latest revaluation.

Allco Singapore said the Reit is trading at a substantial discount to its reported net asset value and the strategic review to study the divestment of its Australian assets is ‘designed to explore the means by which this gap may potentially be closed’.

As at Dec 31, 2007, Allco Reit’s net asset value was $1.45 (post payment of 2H2007 distribution). The Reit was last traded at 80 cents per unit.

Asked if there was a possibility that Allco Reit could itself be acquired, Mr McGrath said he was not in a position to answer.

‘If an offer was made to the unit-holders that was attractive, it would be up to the unit-holders to decide,’ he said.