The consolidation of REITs in Singapore have started with the sale of Allco Commercial REIT and the manager, Allco (Singapore) Limited to Fraser and Neave.
Frasers Centrepoint Limited, a wholly-owned subsidiary of F&N, will buy over 17.7% of Allco Commercial REIT and 100.0% of Allco (Singapore) Limited from Allco Finance Group.
Based on the offered price, Allco REIT is valued at $0.83, which is a discount of 42.3% to the unaudited NAV of $1.44 as at 31 March 2008, and a premium of 16.9% to the closing price of $0.71 on 7 July 2008.
With the purchase, Frasers Centrepoint Limited will terminate the planned listing of their commercial REIT and will instead use Allco REIT as a vehicle for its further commerical property activities.
Upon completion of the purchase, Allco REIT will be renamed Frasers Commercial Trust.
The sale of Allco REIT at such a huge discount to its NAV is probably due to the need of their parent, Allco Finance Group, to raise funds. This sale takes place before the proposed strategic portfolio focus of Allco REIT mentioned a few months ago can be completed.