ALLCO Finance Group has sold part of its Singaporean real estate arm and the company will use the money to pay down debt and review other property activities.
The sale to Frasers Centrepoint Ltd (FCL) involves Allco's 17.7 per cent interest in the Allco Commercial REIT and its 100 per cent stake in the manager of the Allco REIT, Allco Singapore Ltd.It will generate proceeds of more than $90 million, Allco said.
"The proceeds will be used to further reduce Allco's senior debt as well as providing Allco with further operating liquidity," Allco said in a statement.
Allco chief executive David Clarke said the sale had delivered a good profit result for Allco and released a significant amount of cash.
"This is an excellent result for a business that is less than three years old, but one which has continued to deliver returns for unitholders," Mr Clarke said.
"The sale delivers a good profit result for Allco and releases a significant amount of cash, which will be directed towards lowering group debt and providing additional operating cash to support Allco's core business activities."
He said the sale, as well as recent asset sales, meant Allco had "significantly progressed" its restructuring plans.
"Allco has significantly progressed its restructuring plans to a refocused strategy built around our core capabilities of sourcing and managing aviation, shipping and rail assets, managing the funds that own those assets and private equity," Mr Clarke said.
The company said it had also appointed investment bank JP Morgan to carry out a strategic review of its remaining property funds management activities.
"Once the outcome of this review is finalised, Allco will make further announcements about its future strategy in real estate," the firm said.
Allco REIT was listed on the Singapore Exchange Securities Trading Ltd on March 30 and had exposure to assets in Singapore and Perth at the time of the initial public offering (IPO).
They included investments in two properties and a fund investment that gave it a portfolio exposure to three commercial and retail properties in Australia.
Since the IPO, another seven commercial properties have been added to the portfolio, with assets now held in Singapore, Japan and Australia.
Allco said the Singapore sale was expected to be completed on August 6. The sale is subject to the approval of regulatory authorities in Singapore and Australia.
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