Record Funds in informal talks over Record Reality

Record Funds Management Limited (RFML) has been in informal discussions with various parties regarding the trust management and responsible entity functions for the Record Realty Trust (RRT), as a result of the recapitalisation of Allco Funds Management Limited (AFML).

RFML, currently the responsible entity for RRT, said the receiver has agreed for AFML to continue to provide management services to RRT until the end of January 2009.

The fund manager of RRT, Tim McEnallay, said RFML has considered changes in the manager and responsible entity roles since Allco Finance Group’s announcement earlier this year that real estate was not part of its future business plan.

“With the appointment of voluntary administrators to Allco Finance Group and Allco Funds Management Limited the need has been accelerated,” he said.

The RFML Board plans to replace AFML as the manager or internalise management of RRT as a result of the need to recapitalise the Trust.

RFML said that so far no proposals resulting from their informal discussions have met the interests of RRT unitholders. RFML said independent directors of the RFML Board review all proposals presented to management.

RFML said in their statement: “Discussions continue with some of the parties who have indicated their approaches are based on the high quality of the assets in the RRT portfolio and their long-term tenancies with government and corporate tenants.”

An asset realisation program commenced earlier this year for RRT, whose portfolio consists of 40 high quality properties in Australia, the US and Germany. Since March, assets within the portfolio have been marketed, but RFML said “the majority of offers received have not been at realistic levels”, and were deemed unacceptable and not in RRT unitholders’ best interests.

McEnnallay said they informed untiholders at the beginning of the asset realisation program that they would not sell assets unless the offers “represented true market value”.

“The restructure of the management functions and a recapitalisation will, we anticipate, enable the continuation of the measured approach to the asset realisation program,” McEnnallay said.