MacarthurCook Fund H1 distribution falls

DPU for quarter ended Dec 31 was cut as warned by the fund

MACARTHURCOOK Property Securities Fund yesterday reported a distribution income of A$6.68 million (S$6.64 million) for the half year ended Dec 31, 2008 – 46 per cent less than a year ago.

And as the fund had warned last year, distribution per unit for the quarter ended Dec 31 was cut to one Australian cent, down from 2.625 Australian cents for the same period last year. This is part of measures to ‘strengthen the fund’s balance sheet’ amid challenging economic conditions.

‘Increasing numbers of listed and unlisted property trusts have been reducing distributions as sustainable operating cash flows come under pressure,’ the fund said. ‘This is predominantly from a decrease in asset values and/or adverse currency movements.’

The fund also announced a deeper net loss of A$30.35 million caused by unrealised investment losses as the value of listed and unlisted property securities fell. It had incurred a smaller net loss of A$3.25 million a year ago.

As at Dec 31, the fund’s assets were worth A$152 million and around 85 per cent were in unlisted property securities. Some 11 per cent were in listed property securities. Total asset value had plunged 41 per cent since end-2007. Not only does the fund have to contend with falling asset values and a shrinking distribution income, it also has to refinance a A$45.5 million debt facility by May 15 this year. It said that the lender, OCBC Bank, has indicated that it would not roll over this facility.

But the fund reassured investors that it is ‘in negotiations with several alternative financiers and has reason to believe that a new financing arrangement will be established prior to the termination date’.

‘Once the debt is refinanced, monies redeemed from unlisted (funds) may be further directed to real estate investment trusts due to better relative value,’ it said.

The fund’s loan-to-value ratio stood at 29.9 per cent as at Dec 31. There were no trades in the fund’s units yesterday. The counter last registered a closing price of 10 Singapore cents on Tuesday.

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