allco news from singapore

From Danny Johns in Tuesday's Sydney Morning Herald ( and, remarkably for Danny John's work, it sort of makes sense and actually seems to be news )


"THE Singaporean real estate arm of the Allco Finance Group has pushed back a pressing deadline to repay $S550 million ($440 million) of debt that will relieve any demands on it for a swift sale of its recently expanded property portfolio.

Allco (Singapore), which manages the locally listed Allco Commercial Real Estate Investment Trust, hopes to complete the refinancing terms in the next few days after securing the backing of its lenders to extend the maturity date on the debt from the end of July to December next year.

Wrapping up the new terms will be a significant move for Allco REIT which, like Allco's real estate offshoots in the US and Europe under the Rubicon name, have been facing deadlines to relieve debt and so avoid asset fire sales.

In a statement released to the Singapore Stock Exchange, on which Allco REIT listed two years ago, the trust and its manager said the next key step was to complete the paperwork with the bankers involved.

"The manager is reviewing the terms and conditions of the extension and will execute binding documentation as soon as practicable," the statement added.

However, the news was followed by an announcement from the credit ratings agency Moody's, which said it had downgraded Allco REIT from Ba1 to Ba2 as a result of the refinancing effort. It would also review the situation once the impact of the deal become clearer over the coming months.

The chief executive of Allco (Singapore), Nicholas McGrath, told the Herald yesterday that while he was always confident the refinancing would go ahead, he was nonetheless delighted it had been agreed on reasonable terms in light of the global credit crunch.

In a related move, the trust is also plans to clear a further $70 million of debt due to mature on November 22 with the proceeds from the liquidation of a separate Allco-branded and unlisted entity, the Allco Wholesale Property Fund. That fund quietly announced this month that it was selling all of its assets, including its stakes in three Sydney properties - including the new Ernst & Young tower block and the World Square retail complex and car park near Town Hall - and would return the profits to investors.

Those disposals will follow Allco REIT's plan to cash in on the boom in Australian real estate prices that could see it sell its 50 per cent interests in a Canberra office block that houses Centrelink and Perth's tallest office building, Central Park.

The two could raise as much as $500 million, having had an explosive growth in value. But they are also the two properties that sit outside Allco REIT's recent drive to invest more widely in property across Asia, with its main interests in Singapore and Japan.

The profits from selling out of Australia will be used, in the first instance, to reduce its debt burden and bring its gearing down from 43 per cent to about 30 per cent.