 |
Fund updateThe Becton Diversified Property Fund invests in other Becton managed funds and as such its income and capital performance is dependent on those funds. Despite early signs of improvement we remain cautious about the outlook, especially as any recovery is likely to be slow. The funds in which the fund invests continue to be impacted, both in terms of distributions and to a lesser extent capital, by the performance of the fund investments, their need to fund capital expenditure from earnings, higher interest rate margins and the inability of some of them to provide liquidity. Post 30 June 2010 two of the fund’s single property trust investments sold their assets. Becton Southlands Boulevard Property Trust provided the fund with a $3.5 million return of capital in July 2010. These proceeds are being held as cash by the fund. The unconditional sale by Becton 226 Greenhill Road Property Trust of its sole asset is expected to settle in late November. The fund expects to receive approximately $1.0 million following settlement of that sale. The proceeds of both sales may be used to protect the fund’s equity in other investments and so enhance the prospects of great liquidity for Becton Diversified Property Fund investors. |
Becton Office Fund and Becton Retail Fund continue to be affected by refinancing risks and the associated increased debt costs. They have also been the largest contributors to the reduction in value over the June and September quarters.
For further information relating to the performance of the fund’s investments please refer to the updates on each fund within this edition of Review.
The fund is closed to redemptions. The distribution for the June and September quarters remained 0.20 cents per unit. This equates to an annualised distribution of 0.80 cents per unit. All distributions are funded from the operating income of the fund.
The 9.1 cents per unit reduction in net asset value since 31 March 2010 was predominantly caused by a $5.5 million value reduction in the Becton Retail Fund, which fell by 45 per cent, and a $11.8 million reduction in the Becton Office Fund which fell by 72 per cent. The values of the fund’s remaining investments were relatively stable over the course of the period.
The fund has no debt.
As the fund is a ‘fund of funds’ investment, it does not directly own properties, engage in leasing activity or have capital expenditure. For details of leasing activity, capital expenditure, asset values and divestments in the funds in which it invests, please refer to the updates on each fund within this edition of Review.
On 6 October 2010, Becton announced the sale of its Funds Management business to 360 Capital Group. We are working on obtaining all the necessary approvals and settling the sale before the end of the calendar year. The sale is the culmination of more than two years’ work to achieve a longer term capital management solution for the funds. It will provide the funds with the backing of a debt-free specialist property funds manager which in turn will provide the funds with enhanced prospects of attracting capital where needed. For further information about the sale please refer to the CEO’s letter in this edition of Review and to the FAQs on the Becton Investment Management website: www.bim.com.au.
