In April 2009, AIMS became the largest shareholder (15.8%) of the ASX listed fund manager, MacarthurCook Limited (MCK)
. In August 2009, AIMS' holding increased to 54.0% and by November 2009, AIMS' became the 100.0% owner of MCK which was subsequently delisted from the ASX.
MacarthurCook Funds Turnaround Story
At the time of acquisition, MacarthurCook's fund management business was severely distressed with each of the 4 listed funds and a number of unlisted funds being starved of capital and highly leveraged with asset values decreasing. Under AIMS' leadership, MacarthurCook's funds have been turned around, stabilised and improved outcome for investors, for example:
A. The MacarthurCook Industrial REIT (MI-REIT) listed on the SGX (now known as AIMS AMP Capital Industrial REIT
). At the time of the AIMS acquisition of MacarthurCook in 2009, MI-REIT was a vehicle which was in distress. MI-REIT had an obligation to refinance S$220.8million and purchase a S$90.2million property which previous management had entered into in 2007 without finance in place. As at 31 March 2009, MI-REIT's market capitalisation was approximately S$60.2 million and total assets were S$544.0 million. In December 2009, MI-REIT was renamed to AIMS AMP Capital Industrial REIT (AA-REIT). Under the new management of AIMS AMP Capital Industrial REIT Management Limited, a joint venture REIT management company owned 50 percent each by AIMS and AMP Capital, AA-REIT has grown significantly with a market capitalisation S$707.8 million and S$1.06 billion total assets as at 31 March 2013.
B. The MacarthurCook Property Securities Fund (MPS) which is listed on the ASX and SGX. Since the takeover of MacarthurCook, through AIMS management, MPS has been able to significantly reduce its debt from A$44.5 million with a gearing ratio of 38% to nil as 31 May 2013. MPS is now uniquely positioned to access the capital markets in Australia and Asia through its dual listing on the ASX and SGX.
C. The privatisation of the MacarthurCook Industrial Property Fund (MIF) which was formerly listed on the ASX and was distressed at the time of acquisition. The share price of the fund at the time AIMS took over MacarthurCook was $0.16. AIMS reduced vacancy in the MIF portfolio and improved the weighted average lease expiry to more than 5 years. In October 2010, unitholders voted in favour of accepting an offer from a US fund at A$0.44 per unit representing a 42.0% premium to the pre-announcement trading price.
We are pleased to have sucessfully turned around a number of MacarthurCook's distressed funds for our investors. This required AIMS Group to provide a significant amount of capital into the MacarthurCook's funds and operating business. Despite the sale of assets and the provision of large amount of funds from AIMS Group, Australian Property Investment Strategic Pty Limited, one of the entities within the MacarthurCook Group, still suffers financial difficulties due to the high level of debt, other obligations and excessive operating costs that already existed when AIMS Group took over the business in August 2009.