Orchard Industry Property Fund sells fifth non-core asset
Orchard Industrial Property Fund has continued to reduce its debt levels with the sale of a fifth non-core asset, bringing the total from sales to $36 million.
As announced today, its 830 Wellington Road property at Rowville, Victoria, sold for $8 million off market to a private investor through Colliers International, with settlement of the sale to occur in May 2009. The Rowville property is the fifth non-core asset the fund has sold since listing on the Australian Securities Exchange (ASX) in July 2007.
“The sale of five smaller non-core assets of the fund has realised capital which has been used to reduce debt and improve key portfolio assets such as the Woolworths Perth Airport Regional Distribution Centre,” said Orchard Industrial Property Fund head of funds management and fund manager Timothy Collyer.
Orchard Funds Management recently reported that a decline in the value of its Industrial Property Fund weighed heavily on the diversified trust.
According to the report, the share price had fallen from 98 cents per share to 55 cents at the end of February.
Orchard Funds chief executive officer David Hinde said the current property market environment has resulted in downward pressure on the value of assets.
“As anticipated, due to the current market environment, there has recently been widespread declines in property valuations which have led to downward pressure on portfolio values and unit prices,” he said in a letter to investors.
“Sadly, this cycle looks set to continue.”
Orchard’s plan for this year is to reduce debt and conserve cash in its funds. Some funds are at the limit of their borrowings, with the Diversified Property Fund’s gearing ratio at 78 per cent.
“This year is proving to be tough and challenging, but we are confident that the deleveraging and cash management programs put in place last year will put the funds in a better position,” the report said.
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