Arnold Property Fund hits road to sell new unit strategy to investors

Posted On Friday, 19 November 2004 02:00 Published by eProp Commercial Property News
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Listed property loan stock company Arnold Property Fund (A-Prop) has been on a week-long roadshow to gain support from its investors for proposed changes and property acquisitions that promise to significantly improve its viability.

Michael AitkenMichael Aitken, MD of Corovest, A-Prop's new fund managers, said yesterday they had received a "very positive response from existing unitholders", as well as from potential new investors in the fund.

Aitken said that the roadshow had two purposes to obtain the necessary support for various resolutions that will be on the agenda at a unitholders' meeting next week, and to inform the market that the company had been stabilised and would be restructured.

A-Prop has agreed to acquire a portfolio of properties worth about R287m from Momentum Property Investments in a unit exchange deal, and also wants to change its name to Freestone Property Holdings.

It also wants a unit consolidation strategy accepted by unitholders. The resolutions will be decided upon at the unitholders' meeting.

A-Prop's difficult ies have been eased by fund managers Corovest, appointed last year at the behest of major unitholders after a substantial loss in the value of linked units and the decline in net asset value. The acquisition of the Momentum portfolio will push A-Prop's property assets over the R1bn mark and reduce its ratio of loan to value of assets to slightly less than 60%.

At one stage this ratio stood at more than 80%.

Aitken said the unit consolidation strategy was aimed at reducing volatility in the stock's unit price. A-Prop is trading in the 89c- 90c band.

The group wants to take every five existing linked units, which comprise a share and a debenture. The new price of the consolidated unit should be R4,50.

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