Allco REIT

tfwee · Veteran

RE: Allco REIT

tfwee · Veteran

The Capital Group Companies, Inc. ("CGC") has reduced it holding in Allco From 16.152 % To 15.868 %.

Date of change of Deemed Interest: 25-06-2007

tfwee · Veteran

The Capital Group Companies, Inc. ("CGC") has increased it holding in Allco From 15.904 % To 16.152 %.

Date of change of Deemed Interest: 21-06-2007

tfwee · Veteran

ANNOUNCEMENT

RIGHTS ISSUE PRICE AND UNDERWRITING PRICE
Where capitalised terms are used in this announcement and not otherwise defined, such capitalised terms shall bear the same meanings as ascribed to them in the announcements made by Allco Commercial Real Estate Investment Trust ("Allco REIT") on 25 May 2007 and 26 May 2007.

Further to the announcements made by Allco REIT on 25 May 2007 and 26 May 2007, the Board of Directors of Allco (Singapore) Limited, as manager of Allco REIT (Manager), is pleased to announce that the Rights Issue Price per Rights Unit is S$1.04. Applications for Excess Rights Units by Eligible Unitholders will be made at the Underwriting Price of S$1.14. Any Remaining Rights Units will be underwritten by the Sole Underwriter at the Underwriting Price.

Further details will be set out in the circular (which includes the Offer Information Statement) to be lodged with the MAS and despatched to Unitholders in due course.

tfwee · Veteran

DRAWBRIDGE GLOBAL MACRO MASTER FUND has reduced it holding from 5.56 % to 0 %

Date of change of Interest: 30-11-2006
Date of notice to issuer: 08-06-2007

Comment: Six months after it was annouced.

-- Edited by tfwee at 23:27, 2007-06-25

tfwee · Veteran

Extracted from Allco Circular.

9.4 Costs of the Rights Issue

If Allco REIT proceeds with the Rights Issue, the Manager estimates that Allco REIT will have to bear the following estimated costs and expenses:

the underwriting commissions, incentive fees and related expenses payable to, the Sole Underwriter, amounting to up to S$4.2 million (excluding goods and services tax and other applicable taxes payable);

the fees payable to Allco Funds Management of S$1.1 million (excluding goods and services tax and other applicable taxes payable) as consideration for the provision of certain arranger services (including but not limited to rendering advice on the structure of the Rights Issue, preparation of relevant documentation and liaising with the professional advisers) in connection with the Rights Issue. Allco Funds Management is a wholly-owned subsidiary of the Sponsor. Mr. Christopher John West, our Non- Executive Director is also a director of Allco Funds Management; and

the professional and other fees and expenses of S$2.1 million (excluding goods and services tax and other applicable taxes payable) expected to be incurred by Allco REIT in connection with the Rights Issue.

tfwee · Veteran

Extracted from Allco Circular.

The Rights Issue The proposed renounceable underwritten rights issue ( Rights Issue ) of New Units at the Rights Issue Price (as defined herein) to Eligible Unitholders (as defined herein) will provide Unitholders with a unique opportunity to be rewarded for being unitholders of Allco REIT and enable them to continue to benefit from the current demand for high quality office and retail assets, whilst enjoying regular and stable distributions.

The Manager intends to raise gross proceeds of up to S$210.0 million from the Rights Issue. The exact amount of gross proceeds will depend on the actual number of New Units issued under the Rights Issue and the Rights Issue Price, which are to be determined between the Manager and the Sole Underwriter. The number of Rights Units to be provisionally allotted for every existing Unit held on the time and date on which the transfer books and register of Unitholders will be closed to determine the provisional allotments of Eligible Unitholders to the Rights Issue ( Books Closure Date ) (fractions of a Unit to be disregarded) will be notified to Unitholders and set out in the notice of Books Closure Date, and will also be set out in the offer information statement ( Offer Information Statement ) to be lodged with the MAS in connection with the Rights Issue. The Rights Issue Price will be determined closer to the date of commencement of the Rights Issue and will be at a discount to the volume weighted average price for a Unit for all trades on the SGX-ST in the ordinary course of trading for the period of 10 Market Days prior to and including the last day of the Units trading cum rights ( Reference Price ). The Manager currently expects the discount to be between 15.0% and 35.0% of the Reference Price. The Rights Issue Price will be notified to Unitholders on the Books Closure Date and will also be set out in the Offer Information Statement.

Assuming gross proceeds of S$210.0 million, the net proceeds to Allco REIT, after deducting the estimated costs and expenses, are estimated to be S$202.7 million. Subject to the relevant laws and regulations, the Manager intends to utilise S$138.6 million(1)(2) of the net proceeds of the Rights Issue to finance its proposed acquisition of a 50.0% indirect interest in the Centrelink Property, and S$64.0 million to repay existing debt so as to partially refinance Allco REIT s existing portfolio following the acquisition of the Market Street Property. To the extent that the net proceeds raised are less than S$202.6 million, the amount of debt refinanced will be reduced. The Manager may, at its absolute discretion, utilise the proceeds of the Rights Issue to acquire any other suitable property or properties for Allco REIT, and/or for general corporate purposes.

-- Edited by tfwee at 16:04, 2007-06-01

tfwee · Veteran

IMPORTANT DATES AND TIMES FOR UNITHOLDERS For Right Issue

Last date and time for lodgement of Proxy Forms : 9 June 2007 at 9.30 a.m.
Date and time of Extraordinary General Meeting : 11 June 2007 at 9.30 a.m.
Place of Extraordinary General Meeting : The Fullerton Hotel, The Straits Room, Level 4, One Fullerton Square, Singapore 049178

tfwee · Veteran

ALLCO, ml remains a BUY with target price $1.93

- Acquires 50% interest in Centrelink Property, Canberra . Allco Commercial REIT has announced the acquisition of a 50% interest in the Centrelink Property Canberra, Australia for a consideration of S$136.5mn. The office building will be completed in June 2007 and is being acquired jointly with Record Realty on an initial yield of 7.7%.

- Renounceable rights offer to existing shareholders . To finance the acquisition and pay down existing debt, Allco intends to raise S$210mn through a renounceable rights offering to existing shareholders. The rights issue price will be offered at a discount of between 15% and 35% to share price. The acquisition is yield accretive; however, together with the rights issue it will not have a material impact on FY07 DPU.

- Acquisition capacity now at S$1bn. Allco's gearing post acquisition and rights issues will fall to approx. 23%. This is the lowest gearing level amongst the office exposed S-REITs and equates to an acquisition capacity of approximately S$1bn. We believe this enhances Allco's ability to expand, and we would expect them to acquire again before year-end.

- Maintain BUY. We maintain our Buy rating on Allco and PO of S$1.93. We expect the share price to rally pre books closure date given the implied value of the rights. We continue to believe that Allco is the most undervalued of the Singapore office plays and remains a top pick within the Singapore REIT sector.

tfwee · Veteran

ALLCO - Nomura remains STRONG BUY with target price $1.61

- Allco has innovatively proposed a renounceable rights issue to facilitate the acquisition of a 50% stake in a Canberra office building. The deal lengthens Allco's average lease term to 12.8 years. With cashflows underpinned, with think the deal is a precursor to more opportunistic deals in Asia. Our STRONG BUY call stands.

- Allco proposes yield-accretive deal, NAV raised to S$1.61 . Allco has proposed to acquire a 50% stake in a Canberra office building for S$136.5mn, with the deal to be funded via a proposed S$210mn renounceable rights issue. The targeted property is being acquired on a cash yield of 6.0%, with the property leased for 18 years to the Australian federal government agency Centrelink (unlisted). The acquisition will increase the weighted average lease term of the Allco portfolio from 5.4 years to 12.8 years. With the portfolio having a secure cashflow, we believe the deal will enable Allco to pursue more opportunistic acquisitions in Asia. We have analysed the deal and rights issue and believe it to be yield accretive by 5.6% in FY07F, 4.0% in FY08F and 3.8% in FY09F.

Note
1) As the deal has yet to be sealed, we have not incorporated it into our official forecasts, though our analysis is presented in Exhibit 1.
2) Our yield-accretion calculation is based on our estimated theoretical ex-rights price of S$1.24/unit (see Exhibit 2).

- Independent of the proposed acquisition and rights issue, we have raised our SOTP NAV (pre rights) to S$1.61/unit (from S$1.53/unit), on the basis of 1) higher valuations for its Singapore property assets, given recent transactions we now value them at S$1,404/psf (versus S$1,361/psf previously), and higher translated valuations of the group's interest in Central Park Perth, given the strength of the Australian dollar.

- Allco to acquire 50% stake in Canberra office for S$136.5mn. Allco has agreed to acquire a 50.0% indirect interest in "the Centrelink Property" for A$108.75mn (S$136.5mn). The property has a projected cash yield of 6%. (Note the reported initial yield of 7.7% and assumed income of A$5.2mn for FY07, and 7.4% yield and assumed income of A$10.1mn for FY08, are accounting yields, due to the long lease revenue being recorded on a straight-line basis). According to the Property Council of Australia, as at end 2006, Canberra had an office vacancy of only 1.8%, the lowest in 16 years. While vacancy is low, supply is on the rise, with an expected 260,000sm due for completion in 2007 and 40,000sm over 2008-09. While the supply/demand balance is expected to shift, the Centrelink Property is to be leased by an Australian Federal government entity, Centrelink, for an initial term of 18 years from 4 July, 2007, protecting Allco's cashflow from near-term market fluctuations. The lease incorporates a 3% annual rental escalation for the initial 18-year term. The office building has been purpose designed for Centrelink. In addition, Centrelink has an option to renew its lease for two additional consecutive terms of five years each. The Centrelink Property has a land area of approximately 575,869sf (53,500sm) and forms part of the Tuggeranong town centre in Greenway, Canberra. It is located in the western section of the Tuggeranong Town Centre, immediately to the south of the Tuggeranong Office Park, approximately 25km south of the Canberra CBD. According to Allco, the Centrelink Property comprises a contemporary designed, five-storey (basement and four upper levels) commercial office building with an NLA of approximately 430,556sf (40,000sm) and 1,093 car parking bays. The property is due for completion in June 2007.

- Renounceable rights issue to raise S$210mn. Allco is proposing a renounceable underwritten rights issue of new units. It expects to raise gross proceeds of up to S$210.0mn. Allco intends to use S$138.6mn to finance the proposed acquisition in Canberra, and the rest to repay existing debt/partly refinance the existing portfolio. We expect FY07F debt to fall from our current forecast of 0.35x to 0.31x, giving opportunities for more leveraged acquisitions. We estimate the deal to be yield accretive, by 5.6% in FY07F, 4.0% in FY08F and 3.8% in FY09F. Note our yield accretion calculation is based on our estimated theoretical ex-rights price of S$1.24/unit, assuming the rights are issued at a 25% discount to the current share price (the manager has indicated a 15-35% discount) (see Exhibit 2).

- Looking to fund more growth; suggests more acquisitions. Within the circular, the manager is proposing to seek a general mandate for issuing of additional new units in 2007, provided that the number of new units does not exceed 50.0% of the number of units in issue as at 31 December, 2006. The general mandate would allow Allco REIT to issue an additional 247.7mn new units. Assuming these units were issued at a 15% discount to the current share price, Allco would be facilitating the raising of about S$280mn. Given the nature of the mandate sought, it suggests Allco is looking to make further acquisitions in the next six months.

tfwee · Veteran

ALLCO REIT ANNOUNCES A PROPOSED YIELD ACCRETIVE PROPERTY ACQUISITION AND A RIGHTS ISSUE

KEY HIGHLIGHTS

PROPOSED YIELD ACCRETIVE ACQUISITION OF A 50.0% INTEREST IN THE CENTRELINK PROPERTY LOCATED IN CANBERRA, AUSTRALIA FOR S$136.5 MILLION
PROPOSED RENOUNCEABLE UNDERWRITTEN RIGHTS ISSUE TO RAISE UP TO S$210.0 MILLION TO ACQUIRE THE CENTRELINK PROPERTY AND TO REPAY DEBT

Singapore, 25 May 2007 Allco (Singapore) Limited (the Manager or Allco Singapore), the manager of Allco Commercial Real Estate Investment Trust (Allco REIT) (SGX:ALLC) wishes to announce that it has today obtained clearance from the Singapore Exchange Securities Trading Limited (SGX-ST) to dispatch a Unitholders Circular (the Circular) to the Unitholders of Allco REIT. The Circular seeks Unitholders approval in relation to:

1) The proposed acquisition by Allco REIT of a 50.0% indirect interest in a new office complex located in Canberra, Australia and which will be leased to the Centrelink National Support Office (Centrelink), a statutory agency of the Australian federal government (the Centrelink Property);

2) The signing of certain documents relating to the acquisition of the Centrelink Property;

3) The proposed renounceable underwritten rights issue of new units (the Rights Issue); and

4) The proposed general mandate for the issue of new units

An Extraordinary General Meeting (EGM) of the Unitholders of Allco REIT will be held at The Straits Room, Level 4, The Fullerton Hotel, 1 Fullerton Square, Singapore 049178 on Monday, 11 June 2007 at 09.30 a.m.

KK · Guru

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KK · Guru

Extracts fm SGX Announcement,

>> PART I
1. Date of notice to issuer * 08-09-2006
2. Name of Substantial Shareholder * THE CAPITAL GROUP COMPANIES, INC.

>> PART III
1. Date of change of Shareholding 07-09-2006
2. The change in the percentage level From 13.1054 % To 14.42349 %
3. Circumstance(s) giving rise to the interest or change in interest : Open Market Purchase
4. A statement of whether the change in the percentage level is the result of a transaction or a series of transactions: Shares were purchased through a series of transactions from 04/9/2006 through 07/9/2006.

>> PART IV
No. of shares held before the change : 64,867,000
As a percentage of issued share capital : 13.1054 %
No. of shares held after the change : 71,391,000
As a percentage of issued share capital : 14.42349 %

KK · Guru

Extracts fm SGX Announcement,

>> PART I
1. Date of notice to issuer * 06-09-2006
2. Name of Substantial Shareholder * ENSO CAPITAL MANAGEMENT LLC

>> PART III
1. Date of change of Shareholding 04-09-2006
2. The change in the percentage level From 5.95 % To 6.01 %
3. Circumstance(s) giving rise to the interest or change in interest :

Market purchases of 126,475 units and 147,525 units by Enso Global Equities Master Partnership, LP ("Enso MAS") and Enso Global Equities Levered Master Partnership, LP ("Enso LEV"), respectively. Enso Capital Management, Ltd. ("Enso Ltd"), as a general partner of Enso MAS and Enso LEV is deemed to have an interest in the units held by Enso MAS and Enso LEV. Enso LLC is deemed to have an interest in such units through its controlling interest in Enso Ltd. Enso LLC is also the investment manager to Enso MAS and Enso LEV.

>> PART IV
No. of shares held before the change : 29,439,007
As a percentage of issued share capital : 5.95 %
No. of shares held after the change : 29,713,007
As a percentage of issued share capital : 6.01 %

KK · Guru

Extracts fm SGX Announcement,

>> PART I
1. Date of notice to issuer * 01-09-2006
2. Name of Substantial Shareholder * THE CAPITAL GROUP COMPANIES, INC.

>> PART III
1. Date of change of Shareholding 01-09-2006
2. The change in the percentage level From 10.217 % To 13.1149 %
3. Circumstance(s) giving rise to the interest or change in interest : Open Market Purchase
4. A statement of whether the change in the percentage level is the result of a transaction or a series of transactions: Shares were purchased through a series of transactions from 24/8/2006 through 01/9/2006.

>> PART IV
No. of shares held before the change : 50,534,000
As a percentage of issued share capital : 10.217 %
No. of shares held after the change : 64,867,000
As a percentage of issued share capital : 13.1149 %

KK · Guru

Extracts fm SGX Announcement,

>> PART I
1. Date of notice to issuer * 24-08-2006
2. Name of Substantial Shareholder * THE CAPITAL GROUP COMPANIES, INC.

>> PART III
1. Date of change of Shareholding 23-08-2006
2. The change in the percentage level From 7.9114 % To 10.2170 %
3. Circumstance(s) giving rise to the interest or change in interest : Open Market Purchase
4. A statement of whether the change in the percentage level is the result of a transaction or a series of transactions: Shares were purchased through a series of transactions on 23/08/2006.

>> PART IV
No. of shares held before the change : 39,130,000
As a percentage of issued share capital : 7.9114 %
No. of shares held after the change : 50,534,000
As a percentage of issued share capital : 10.2170 %

Extracts fm SGX Announcement,

>> PART I
1. Date of notice to issuer * 23-08-2006
2. Name of Substantial Shareholder * THE CAPITAL GROUP COMPANIES, INC.

>> PART III
1. Date of change of Shareholding 22-08-2006
2. The change in the percentage level From 6.4395 % To 7.9114 %
3. Circumstance(s) giving rise to the interest or change in interest : Open Market Purchase
4. A statement of whether the change in the percentage level is the result of a transaction or a series of transactions: Shares were purchased through a series of transactions from 10/05/2006 through 22/08/2006.

>> PART IV
No. of shares held before the change 31,850,000
As a percentage of issued share capital 6.4395 %
No. of shares held after the change 39,130,000
As a percentage of issued share capital 7.9114 %

KK · Guru

BT, Published August 11, 2006

Allco distribution per unit 4.8% higher than forecast

ALLCO Reit has announced its maiden financial quarterly results with the amount available for distribution to unit-holders - $7.6 million - 4.5 per cent higher than its earlier forecast at the time of its IPO in March.

The office and retail Reit said distribution per unit (DPU) for the period 30 March-30 June is 1.53 cents, 4.8 per cent higher than its forecast of 1.46 cents. The Reit's portfolio is estimated to be about $680 million. Properties include China Square Central and stakes in Australian properties in Perth, Sydney and Melbourne. Net property income for the quarter was $9.8 million, up 1.1 per cent.

Allco Reit also recently announced that it will buy the refurbished former Sinsov Building at 55 Market Street for $72.5 million.

On the prospects for its Australian property, Allco highlighted that office market vacancy is at an all-time low of 4.6 per cent in Perth, where it has a 50 per cent stake in the office building Central Park. It said that average prime gross effective rents in Perth have increased by 14.3 per cent.

Allco Reit's shares, issued at $1 each, yesterday closed unchanged at 85.5 cents.

KK · Guru

Allco REIT - Credit Suisse

KK · Guru

Allco REIT

tfwee · Veteran

The forecast distribution yield for the Forecast Period 2006 and the projected distribution yield for the Projection Year 2007 are partially dependent upon the Manager having elected to forego its Base Fee and Performance Fee for the Forecast Period 2006, and having elected to have those fees paid in Units for the Projection Year 2007, respectively

The forecast distribution yield for the Forecast Period 2006 is partially reliant on the Manager having elected to forego its Base Fee and Performance Fee for the Forecast Period 2006, and the projected distribution yield for the Projection Year 2007 is partially dependent on the Manager having elected to take its Base Fee and Performance Fee in Units for the Projection Year 2007. If the Manager took its Base Fee and Performance Fee for the Forecast Period 2006 in Units, based on the Offering Price the forecast distribution yield for the Forecast Period 2006 would be 5.73%. On the same basis, if the Manager took its Base Fee and Performance Fee for the Forecast Period 2006 in cash, the forecast distribution yield for the Forecast Period 2006 would be 4.92%. Also on the same basis, if the Manager took its Base Fee and Performance Fee for the Projection Year 2007 in cash rather than Units, the projected distribution yield for the Projection Year 2007 would be 5.05%.

The forecast distribution yield for the Forecast Period 2006 and the projected distribution yield for the Projection Year 2007 are partially dependent upon each of the Master Lease and the Central Park (Perth) Income Support Deed not being breached or terminated, and upon the Manager having elected to forego its Base Fee and Performance Fee for the Forecast Period 2006 and having elected to take its base Fee and Performance Fee for the Projection Year 2007 in Units

The forecast distribution yield for the Forecast Period 2006 may be adversely affected by any breach or termination of the Master Lease (see “ − Any breach or termination of the Master Lease may adversely affect Allco REIT’s ability to meet its profit forecast and profit projection”) and any breach or termination of the Central Park (Perth) Income Support Deed (see “ − Should the Central Park (Perth) Income Support Deed be breached or terminated, Allco REIT will only receive the income derived from the tenants of Central Park (Perth)”). The forecast distribution yield for the Forecast Period 2006 is also reliant on the Manager’s decision to forego its Base Fee and Performance Fee for the Forecast Period 2006. If Allco REIT does not have the benefit of the Master Lease and the Central Park (Perth) Income Support Deed for the Forecast Period 2006, and the Manager does not forego its Base Fee and Performance Fee for the Forecast Period 2006 and takes these fees in Units then, based on the Offering Price the forecast distribution yield for the Forecast Period 2006 would be 3.83%. On the same basis, if Allco REIT does not have the benefit of the Master Lease and the Central Park (Perth) Income Support Deed for the Forecast
Period 2006 and the Manager does not forego its Base Fee and Performance Fee for the Forecast Period 2006 and takes these fees in cash, then the forecast distribution yield for the Forecast Period 2006 would be 3.07%. Again on the same basis, if Allco REIT does not have the benefit of the Master Lease and the Central Park (Perth) Income Support Deed for the Projection Year 2007 and in addition the Manager takes
its Base Fee and Performance Fee in cash rather than Units for the Projection Year 2007, the projected distribution yield for the Projection Year 2007 would be 3.61%.

Comment: The yield for 2006 would be around 5.73% instead of 5.77% based on IPO price if base fee and performance fee are taken in account. The only concern is that the base and performance fee are taken in units for Year 2007 or else the yield will be lower than the forecast yield as well. Currently, the rent at China square is below market rate, if the management can improve the area and bring in the crowds, then the DPU should increase. Maybe it is time to go to China Square to for a walk during the weekend to have a feel to see whether the area has improved and to see the whether there are enough crowd for the management to increase the rents.

KK · Guru

There's an article in BT today which may cause price weakness. The article,

Rid Reit market of poison pills

RECENTLY, Temasek Holdings' chief executive Ho Ching called for the tax rate for Singapore corporate investors in real estate investment trusts (Reits) to be lowered. Much has been done to make the Singapore Reit environment investor-friendly and with competition growing from other markets in Asia, one can expect more efforts to sharpen Singapore's competitiveness as an Asian Reit hub. With Reits proliferating and some growing their asset size rapidly, perhaps competitive forces can over time bring down some of the fees being charged by Reit managers.

But one fee which should never be payable and which the regulators should not permit is the payment of a termination fee in the event a Reit manager is removed by unit holders.

In October last year, the Monetary Authority of Singapore (MAS) revised Reit guidelines and gave unit holders the power to remove Reit managers if 50 per cent of unit holders vote for them to go. Until the MAS revision, managers of billion-dollar Reits had an entrenched position, as it took a 75 per cent vote to remove them.

However, some Reits have put in place mechanisms that entrench the position of the manager and appear to violate the spirit of MAS' revised guideline. Take newly listed Allco Commercial Real Estate Investment Trust for instance. The manager of the trust is entitled to receive a termination fee of $20 million in the event the manager is removed by unit holders within five years of the listing date. Such an event may not occur within the stipulated time-frame in which case the termination fee issue is a theoretical one. Still, Allco Reit's price is struggling to go above its initial public offering (IPO) and the possibility of it being taken over by another Reit, which can access capital cheaper by virtue of it trading at a lower distribution yield, cannot be discounted. Should Allco Reit's trading price sink far enough, it may become viable for someone to take it over and replace the manager while coughing up the $20 million fee.

Nevertheless, the principle of having a termination-type fee payable is wrong. Termination fees are poison pills that unfairly entrench the position of incumbents. Poison pills hinder changes of management that may be desired by a simple majority of shareholders and are, therefore, not in the right spirit. They go against the grain of shareholder democracy and should not be tolerated.

The authorities should also re-examine the IPO prospectus of what is now called Macquarie MEAG Prime Reit. Here, there is a proprietary information licensing agreement in place for an indefinite duration, under which a licence fee of $21.7 million becomes payable when Macquarie Bank Group ceases to have any interest in the manager of the trust. Sure, the licensing agreement points to various systems and processes Macquarie will contribute to the Reit. But this licensing agreement appears for all intents to be a financial obstacle put in place to entrench the interest of Macquarie in the management of the Reit.

Reit managers are compensated for managing the assets of a Reit. Moreover, when the Reit performs, there are often mechanisms in place to reward the manager. There is no reason why a Reit manager needs to be paid something extra in the event its services are terminated, especially as termination may stem from poor performance.

Singapore's Reit market has evolved rapidly over a short span of time and is generally heading in the right direction. Regulators deserve kudos for playing their part, for example, in enabling cross-jurisdiction Reits to be launched here. But even as we want to attract Reit issuers to Singapore, we should clamp down on any attempt by Reit sponsors to entrench the position of Reit managers. Allowing the use of these poison pills can only hurt the reputation and growth of Singapore's capital markets. Whether its Reits or listed companies, it is unhealthy for investors to cough up multi-million-dollar fees whenever management gets the boot.

-- Edited by KK at 16:59, 2006-04-10

KK · Guru

Just in case I was rgt on the original post,

1. Impact of Exchange rate on DPU (pg84)
For FY06, 5.77% annualised yield is based on an exchange rate of S$1:A$0.81. The yield drops to 5.7% for S$1:A$0.83, ie. a 2.5% appreciation of S$. The A$0.81 rate, I believe, is based on Dec05 exchange rate. Today, the S$ hv strengthened more than 6% against the A$. If this persists, the yield may drop to aro' 5.6% or lower.

Based on their SGX Announcement, the Aussie assets were acquired at an exchange rate of A$0.86558, I did a line graph using their 3 pts in the prospectus and estimated the yield would be 5.6% @ $1. The estimated price vs yield becomes,

$0.930 6.022%
$0.935 5.989%
$0.940 5.957%
$0.945 5.926%
$0.950 5.895%
$0.955 5.864%
$0.960 5.833%
$0.965 5.803%
$0.970 5.773%
$0.975 5.744%
$0.980 5.714%
$0.985 5.685%
$0.990 5.657%
$0.995 5.628%
$1.000 5.600%

So, using the 'magical' 6% yield as support, the price may drop to NAV of $0.93 after all :D

-- Edited by KK at 01:26, 2006-04-08

KK · Guru

It looks like AllCo is performing better without the stabilising efforts by Credit Suisse! The price vs yield revisited,

$0.930 6.204%
$0.935 6.171%
$0.940 6.138%
$0.945 6.106%
$0.950 6.074%
$0.955 6.042%
$0.960 6.010% Current Mkt Price
$0.965 5.979%
$0.970 5.948%
$0.975 5.918%
$0.980 5.888%
$0.985 5.858%
$0.990 5.828%
$0.995 5.799%
$1.00 5.770%

Fm past observations of Suntec, MMP and AREIT, the 6% annualised yield appears to be the current magical figure supporting all the REITs. Those 3 REITs hv at various times hit their low (which translates to 6% yield) and subsequently recovered.

In the case of AllCo, I was thinking that their 50% exposure to Aussie mkt (A$ was weakening at time of listing) may cause them to break that 6% figure and head towards their NAV of $0.93. Only time will tell.

Anyway, some good comments I hv on AllCo now that I am vested Very Happy

The Aussie assets were purchased at the exchange rate of A$0.86558, which is better than the A$0.81 mentioned in the IPO prospectus. That means,

1) The 2 Aussie assets were S$19.3Mil lower than IPO forecast
2) This S$19.3Mil will be used as working capital in the short term, which means savings on interest expense (they planned to use a revolving credit for this purpose originally) and also some interest income.
3) In the longer run, this amt shld be used for further yield accretive acquisitions (with new debts). If not, they may return as Capital Returns (altho' I think that's very unlikely).
4) If they'd hedged the exchange rate, there shld be little threat to the forecasted div yield. In fact, if A$ were to continue to recover, the yield may even go up.

Some negatives,

a) It may end up like MMP and drop below NAV if no new yield accretive acquisitions is announced within the next 6mths
b) Foreign Currency risk - If A$ stops recovering and weakens instead, the NAV will be impacted.
c) The div payout will be after the Dec06 results (fm prospectus), so unless they change that to a quarterly div payout, mkt may lose interest after a while.

KK · Guru

Allco REIT - Lim and Tan