MI-Reit to defer completion of acquisition deal

It gives update on use of rights issue proceeds, announces board changes

MACARTHURCOOK Industrial Reit (MI-Reit), which plans to buy four industrial buildings from its new co-sponsor AMP Capital Holdings, will defer completion of the deal to Jan 11, 2010.

In filings to the Singapore Exchange on Dec 24, the industrial trust also gave an update on the use of proceeds from its recent rights issue and announced a change of name, as well as changes to its board.

In November, the Reit unveiled a combined debt-and-equity-raising plan involving the placement of new shares to new investor AMP as well as existing sponsor AIMS Financial Group and other cornerstone investors, followed by a rights issue and a new term loan. The plan would raise $430 million, part of which would be used to buy four properties from AMP, which would come in as a co-sponsor.

Following the changes, the name of the Reit has been changed to AIMS-AMP Capital Industrial Reit from Dec 24. The names of the Reit’s manager and property manager have also been changed.

AIMS-AMP Capital Industrial Reit has also appointed two new non-independent, non-executive directors and announced three resignations from its board – an executive director, a non-independent, non-executive director and a non-independent, non-executive deputy chairman.

The Reit has completed its rights issue and has issued 975.6 million new rights units, bringing the number of units in issue to 1.46 billion.

In an update on the use of the proceeds from the rights issue, AIMS-AMP Capital Industrial Reit said $82.5 million of the gross proceeds of $155.1 million raised from the rights issue has been used so far. Of the $82.5 million, $39.9 million was to repay a bridging loan from Standard Chartered Bank, and $27.3 million was used to repay part of a $202.3 million term loan.

As for the planned acquisition of the four properties from AMP for a total of $68.6 million, the Reit said the conditions precedent under put and call option agreements relating to the properties were only met on Dec 24, so completion of the acquisition has been deferred. The Reit’s manager has, however, exercised all of the put and call option agreements.

AIMS-AMP Capital Industrial Reit also said the lease with the current master tenant of 23 Tai Seng Drive – one of four properties the Reit has agreed to buy – has been terminated as part of the conditions needed for the sale to proceed.

AMP wants to regain trust of MI-Reit holders

Medium-term focus will be acquisition of industrial property in S’pore, Japan

THE new co-sponsor of MacarthurCook Industrial Reit (MI-Reit) yesterday said that it will focus on regaining unitholders’ trust before embarking on new acquisitions, likely industrial properties in Singapore and Japan.

Simon Vinson, head of new business initiatives and Asian property at AMP Capital Investors, said that unitholders’ concerns raised at a tumultuous general meeting recently ‘will become front and centre in the way we will operate’.

Such concerns include not consulting unitholders early enough on a controversial recapitalisation plan and the real estate investment trust’s (Reit) own governance and investment processes, Mr Vinson told BT in an interview yesterday.

The rescue plan – approved by narrow margins at the meeting on Nov 23 – was presented to unitholders less than two months before the deadline for the Reit to meet $315 million in obligations.

Angry unitholders said that the deal diluted their holdings significantly and was too favourable to the new investors. Led by Cambridge Industrial Reit (CIT), which owned a close to 10 per cent stake, the unitholders mounted a week-long campaign to oust MI-Reit’s manager but this faltered when CIT said that its plan to take over as manager was blocked by the Monetary Authority of Singapore.

Yesterday, Mr Vinson said that AMP would focus in the short term on regaining investors’ trust by better managing the Reit, before thinking of fresh acquisitions.

While the Reit is now among the lowest geared among those listed in Singapore, the travails of the past year, particularly uncertainty over whether it could raise funds to keep it afloat, have depressed unit prices and raised distribution yields.

This would make yield-accretive acquisitions difficult, Mr Vinson admitted. ‘But the management team and sponsors are capable of showing investment performance that, over time, will bring the unit price up to net asset value,’ he said.

In the medium term, AMP will explore opportunities in industrial property in both Singapore and Japan, he said.