Category: FCOT
AllCo – BT
Allco cancels US$104m unit offer
SINGAPORE – Allco Commercial Real Estate Investment Trust, a property trust based on Singapore and Australian assets, said on Wednesday it has cancelled a planned preferential offering that would have raised up to $150 million (US$104 million) due to poor market conditions.
The trust said it was not proceeding with its plan, announced on Nov 16, to sell up to 175.2 million units to existing unitholders under a one-for-four preferential offer.
‘There is no pressing need for Allco Reit to be raising capital at this time,’ Nicholas McGrath, chief executive officer of Allco Reit’s manager, said in a statement.
Rising risk aversion has turned off investors from yield-driven property and asset trusts, sparking the cancellation of two major initial public offers in Singapore worth a combined US$800 million earlier this month.
An aircraft lease backed by a unit of General Electric and a real estate investment trust by Japanese developer Asia Pacific Land Group postponed their Singapore IPOs after a disastrous market debut by Saizen Reit, whose units fell 13 per cent on its Nov 2 debut. — REUTERS
Allco – CSFB
– ALLC has made seven acquisitions and tripled its portfolio value since listing. We believe that its increasing traction on acquisitions and diversification into new markets reflects management.s execution capabilities and flexibility to acquire in strategic markets. ALLC is also one of the most tax efficient REIT, allowing it to enjoy greater opportunities in target markets.
– ALLC is currently trading at a discount of 40.3% to NAV, which we believe is too steep and unjustified given its significant growth through acquisitions which has been overlooked.
AllCo – SGX
(1) APPROVAL IN-PRINCIPLE FOR THE LISTING OF NEW UNITS;
(2) A NON-RENOUNCEABLE PREFERENTIAL OFFERING OF UP TO 175,182,925 NEW UNITS; AND
(3) BOOKS CLOSURE DATE.
Some Extracts
The issue price of each New Unit pursuant to the Preferential Offering (“Issue Price”) will not be at more than a 10.0% discount to the weighted average price for trades done on the SGX-ST for the full market day on which the underwriting agreement is signed. If trading is not available for the full market day, the weighted average price will be based on the trades done on the preceding market day up to the time the underwriting agreement is signed
The Preferential Offering will comprise a non-renounceable preferential offering of up to 175,182,925 New Units on the basis of one New Unit for every four existing units (“Existing Units”) in Allco REIT held by Eligible Unitholders (as defined below) as at the Books Closure Date (as defined below), fractions of a Unit to be disregarded (“Preferential Offering”).
The last day and time of trading of the Existing Units on a “cum” basis will be 28 November 2007, 5:00 p.m.
The Manager expects that the New Units will be issued and traded on or about 28 December 2007.
Source : SGX
ALLCO – DBS
ALLCO, DBS remains a BUY with target price $1.65
– Gearing after Keypoint stands at 47%. Following the completion of Keypoint acquisition, Allco’s gearing will increase from 33% to approximately 47%, a level that potentially inhibits further acquisitions in the near term and Allco may seek funding from the equity markets for future acquisitions.
– Positive rental reversions. The demand for Singapore’s office and retail space within CBD continues to outstrip supply over the near future. Allco is poised to benefit from this demand squeeze.
– Attractive yield play. Allco continues to enjoy exposure to the booming Singapore property sector (54.1%), Australia (32.8%) and Japan (13.1%). At current price, Allco offers investors an attractive 6.3% yield with potential upside when rental reversions kick in (54% and 30%) over FY08 – FY09.
– Maintain BUY with TP S$1.65. We continue to like Allco and maintain our BUY call with TP S$1.65 based on DCF valuation. Compared to other S-REITS, Allco is currently trading at a 25% discount to NAV of S$1.36.
AllCo – Phillip
Amidst news of recent aggressive buying sprees in the core CBD area, Allco took the alternative approach by making an acquisition in the CBD fringe area. Allco annouced the acquisition of Keypoint, located at the junction of Beach Road and Jalan Sultan, for a total consideration of $370 million, which is at a discount of 1.18% to the appraised value of $374.4 million.
About the property. Keypoint is an integrated 25-storey commercial building with a total NLA of 311,892 sq ft. The building comprises a three storey podium and a 22-storey office tower. Office space represents 89.4% of the NLA while retail space occupies 10.6%. Allco will acquire the property for a total consideration of $370 million, a discount of 1.18% to the appraised value of $374.4 million, at an initial yield of 4.65%. In addition, the acquisition has an income support deed of up to $10.5 million over a period of two years. The acquisition will be fully funded by debt which will bring gearing up to 46%, slightly past the target range of 40%-45%. The leases have a WALE of 1.05 years contracted at an average of $3.28 psf versus the current asking rate of $6.00 psf.
Valuation and Recommendation. With our revised estimates, we have a forecasted payout of 5.42 cents for FY07 and 7.63 cents for FY08, which translate to 5.0% and 7.1% yields respectively. We retain our fair value estimate of $1.68, pending a review after the 3rd quarter results annoucement later in the month. We view the acquisition favourably, mainly due to the a) spillover demand from the core CBD area, and b) expiring leases that allow Allco to capture positive rental reversions at an opportune time when rentals are on an uptrend. We reiterate our view that Allco’s valuation remains attractive given that it is currently trading at a 22% discount to its book value. We feel that Allco has not caught up to the broad market upswing recently and this presents an entry opportunity.