Martin Lee @ Sg
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Allco REIT – Extension of Short Term Debt Maturity

The latest announcement to come out from Allco REIT is that they have received in-principle approval for the extension of the maturity date for their $550 million loan. It was originally due on 31st July 2008; now the new date is set for 31st December 2009.

There is another $70 million dollar debt which is due on 22nd November 2008. This will be paid from the divestment of Allco Wholesale Property Fund (AWPF). AWPF will be liquidated with the net proceeds returned to unitholders in the 3rd quarter of 2008.

And with that, the short term financing problems of Allco Commercial REIT has been resolved. This is a good thing since it does remove one obstacle for any potential buyer.

I don’t expect any acquisitions for Allco REIT in the near future as funding it will be a problem. At the current share price, issuing equity is also out of the question.

The troubles for their parent company, Allco Finance, still continues though. It remains to be seen how much value they can extract from their holdings in Allco REIT if they decide to divest it. When a company is in trouble, you can always count on predators to be around for any firesale.

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