Allco's New Japan Buys To Be Yield- Accretive Straightaway

Source : The Business Times, September 15, 2007

ALLCO Reit is buying three freehold properties in Japan for just over $153 million, which will be immediately yield-accretive to distribution per unit, it said yesterday.

The Galleria Otemae Building, ACO Azabu Aco Building and Ebara Techno-Service Headquarters Building are commercial developments in prominent locations in Osaka and Tokyo.

The buildings have a total net lettable area of 17,078 square metres and a weighted yield of 4.68 per cent for the first 12 months.

Allco said the purchase price is a 1.6 per cent discount to valuation and the deal is expected to be completed by Sept 26.

Allco will then own four commercial property assets in Japan, representing 16.4 per cent of its total property investments.

The Reit's portfolio will be worth more than $1.45 billion, with 42 per cent in Singapore properties and about 41 per cent in Australian properties.

The Galleria building in Osaka has 12 levels of office space and basement retail space. The Aco building in Tokyo has three levels of office space plus office/studio space. The Ebara building in Tokyo has five levels of office space.

The acquisitions will be funded by debt, with the weighted average cost of funding expected to be 2.09 per cent.

Allco's leverage will rise from 25.1 per cent to 33.5 per cent, which is well within its gearing limit of 60 per cent.