Welcome to the Spring edition of Review.
Welcome to the Spring edition of Review. The close of the 2010 financial year saw us working toward a turning point for the Becton Managed Funds, culminating in the announcement on 6 October of the sale of the Funds Management business. The sale is conditional on regulatory and financier approval. Those approvals are currently being sought with a view to settling the sale before the end of the year.
During the June and September quarters we sold five assets, repaid $57.5 million in debt and completed leasing deals in respect of 81,739 square metres of space accounting for $21.2 million in gross annual rent. In addition we were at this time working on longer term financing for the funds and a capital management solution for the business. During the September quarter we defended an action by Century Funds Management which ultimately saw Century seize control of the Becton Office Fund No.2 and the Becton Diversified Direct Property Fund.
On 31 August 2010 we announced a major recapitalisation and refinancing plan for the Becton Property Group. The perception that Becton Property Group, the owner of the Responsible Entity of the funds, was in financial difficulties was a factor successfully exploited by Century in its campaign to take control of the two funds. Finally putting this perception to rest was not only a significant development for the Group, but also a stabilising step for the funds.
On 6 October we announced the sale of the Funds Management business to specialist property funds manager 360 Capital Group. This decision was not made lightly. Over the past two years we have thrown every effort into stabilising the funds. During this time we have sold 38 assets and repaid or refinanced more than $1 billion of debt. We have also actively managed the remaining assets in the portfolio to achieve a 90.3 per cent renewal rate and occupancy of 97.2 per cent across the portfolio. All this was achieved at a time when market conditions were among the most challenging we had seen in the last 80 years.
Whilst under our management the funds have consistently delivered solid operational results, in the capital constrained environment of the last few years, dealing with their capital structure has been a significant challenge. In 360 Capital Group, the funds will have a debt-free manager which should provide enhanced prospects of attracting the capital that some funds need to address this challenge.
The functional separation of the funds from the Becton Group, through the sale to 360 Capital is a positive step forward for fund investors. A number of our investors have been wanting to redeem their investments in some of the funds. The sale to 360 Capital Group will provide the funds with the backing of a strong debt-free manager with enhanced prospects of attracting capital where needed. This in turn should improve investors’ prospects of redeeming their investments in the funds should they wish to do so. 360 Capital has foreshadowed that it will individually review each fund following settlement, including a review of opportunities for liquidity.
We expect that the sale will include the transfer of a number of employees. This will ensure a smooth transition for all stakeholders including investors, planners and advisors, financiers, tenants, external service providers and employees.
Following settlement, we will continue with an orderly transition to the new manager. Investors will continue to be able to contact investor services on the Investor Services Number 1800 182 257. We will post up to date information relating to the transition to the new manager, including any changes to investor services contact details on the Becton Investment Management Limited website: www.bim.com.au
From all the Investment Management team, thank you for the opportunity to manage your investments. We wish you all the best for a prosperous future under the new management.
Kind regards,
Matthew Chun
