Frasers Centrepoint in $180m Allco deal

July 9, 2008
Frasers Centrepoint in $180m Allco deal
Allco Commercial Reit to be renamed Frasers Commercial Trust
By EMILYN YAP

IN what appears to be a sign of consolidation in the Singapore real
estate investment trust (Reit) market, Frasers Centrepoint (FC) is
buying 17.7 per cent of Allco Commercial Reit and 100 per cent of the
Reit's manager, Allco Singapore, for a total consideration of $180
million.

FC, a subsidiary of Fraser and Neave (F&N), had planned to list a
commercial Reit called Frasers Commercial Trust (FCT) and recently
received in-principle listing approval from Singapore Exchange. With
the deal, FC will scrap the listing plan and rename Allco Reit as FCT.

Allco Finance Group, the Australian holding company of Allco
Singapore, is said to be selling its stake to repay debt. For $104.3
million, Allco Finance and two of its subsidiaries will sell 125.65
million Allco Reit units to FC for 83 cents each. The unit price is a
42.4 per cent discount to the Reit's net asset value per unit and a
16.9 per cent premium to its last-traded price of 71 cents on Monday.

FC will also gain control of Allco Singapore by taking on all of its
issued ordinary and preference shares for $75.7 million. The entire
deal could be completed by Aug 6.

According to market watchers, Allco Finance ran a limited auction
that aroused significant interest. As one observer put it: 'This
would represent an immediate platform for a fund manager or property
developer wanting to have a ready-made Reit.'

An FC spokesman told BT: 'Such an opportunity to acquire good quality
commercial properties at an attractive valuation level is rare.'
Allco Reit's property portfolio spans Singapore, Australia and Japan,
and the deal will help FC gain $2 billion of commercial assets under
management.

'Current Allco Reit unit holders will benefit from tapping into the
professional management expertise, regional footprint and resources
of one of Singapore's largest property companies,' FC chief executive
Lim Ee Seng said in a statement yesterday.

Allco Reit will be able to leverage on a ready pipeline of commercial
assets owned by FC. These comprise Alexandra Point, Alexandra
Technopark and the office and ancillary retail components of Valley
Point - properties initially set aside for the planned listing of FCT.

'Depending on prevailing market conditions and subject to the
approval of shareholders, FC intends to inject its commercial assets
within six to 18 months of completion of the acquisition,' an FC
spokesman told BT.

Mr Lim noted: 'We have clear plans to bolster and strengthen the
financial position of Allco Reit.' FC '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'. Details will be
announced at the appropriate time, the FC spokesman said.

FC expects to use internal cash resources and existing credit
facilities to fund the $180 million deal. The acquisition is not
expected to have a material impact on the net asset value or pre-tax
net profit of F&N or its subsidiaries for the year ending Sept 30,
2008.

Credit Suisse Singapore was FC's financial adviser on the acquisition.

News of the deal drove Allco Reit's units up 0.7 per cent or 0.5
cents to end at 71.5 cents yesterday. F&N shares, on the other hand,
closed 0.9 per cent or four cents down at $4.39.