This article is from the Australian Property Journal archive
BLACKWALL Property Fund is busy preparing for its second ASX listing in week. This Friday, BlackWall’s largest fund P-REIT, will commence trading under the code PXT.
BlackWall is the funds management arm of the Pelorus Property Group following a restructure. Pelorus now operates as an unlisted private equity property company.
Blackwall has more that $450 million of funds under management across nine funds ranging from commercial, entertainment, pubs, self storage and mixed use.
CEO Stuart Brown said P-REIT is a $120 million diversified property trust holding a portfolio of industrial, retail and commercial properties along with a portfolio of property securities.
P-REIT began as an unlisted open-ended property investment vehicle managed by the Reed Property Group in 2005. In 2007 the family sold 40% of the company to Lehman Brothers but with the onset of the GFC and Lehmans collapse, P-REIT encountered critical funding difficulties at both the debt and equity level. In June 2009, BlackWall’s principals gained control of the trust and have been working through its many structural and funding issues.
“The trust held illiquid assets and had a redemption facility. The structure only worked while there was more capital coming in than investors wanting to get out. Of course the GFC led to there being no capital coming in and everyone wanting to get out at once. The trust was also heavily geared so suffered in the repricing of commercial real estate,” he added.
Today the trust has over $120 million of gross assets with $57 million of debt giving gearing of 48%. BlackWall expects the trust to be in a position to recommence distributions for the quarter ending December 2011.
“Although the trust still has some legacy issues to resolve we feel it has to the potential to capitalize on many value mismatches we are seeing.
“Listing will assist our strategy of trading or selling some indirect holdings and in some cases increasing holdings to get to a point of control of the underlying real estate. We are also looking at a number of merger and acquisition opportunities,” Brown added.
The trust’s challenges are not over yet with an ongoing court action commenced by MacarthurCook’s ASX listed property securities trust, MPS. The NSW Supreme Court action is against P-REIT and its responsible entity, RFML Limited, in its personal capacity.
MPS is claiming a right to redeem 15 million of its 22.6 million units it holds in the trust in priority to all other unitholders at a redemption price of $1 per unit plus interest and costs. MPS’s claim relates to a series of contracts entered into in 2006 and 2007. In the interim both MacarthurCook’s and PREIT’s backers have changed with Aims Financial Group’s take over of the then listed MacarthurCook Limited.
Recently MacarthurCook failed in a bid to block P-REIT’s listing on the ASX. This second court action lead to BlackWall calling a meeting of P-REITs unit holders at which the listing proposal was approved.
The court action is not expected to be set down for hearing for 6 months.
Australian Property Journal
