ING INDUSTRIAL FUND has restructured the management of its Canadian business as its nears completion of the sale of its Canadian retail portfolio and possibly other assets.
The trust has $C222 million ($277 million) in retail assets on the market. It is understood assets valued at $100 million in Australia and another $197 million elsewhere will be sold in the next two to three months.
The group said this week that after a restructuring of ING Real Estate Canada and the pending sale of its retail assets, its executive chairman, Lou Maroun, chief executive, Paul Dykeman, and three other executives would leave the company by mutual agreement on January 15.
Doug Auchterlonie, the chief investment officer with ING Industrial Fund, will take over as chief executive of the Canadian operations on January 16. Promotions from within senior management of ING Real Estate Canada will fill another three positions in the new structure.
ING Industrial's chief executive, Paul Toussaint, said: "With the retail property portfolio now under conditional contracts of sale, and the subsequent management restructure, the Canadian team is well positioned to focus on its core business of industrial property."
Richard Jones, of JP Morgan, says ING Industrial has lost about 83 per cent of its market capitalisation this year and has underperformed the real estate investment trust index by 26 per cent over the comparable period.
"Given movement in asset values and foreign exchange rates, the fund is likely to be very close or already in technical breach of its 55 per cent covenant," he said.
"This covenant is tested every six months, and the trust will likely have until February to achieve compliance."
He said that a capital raising from either asset sales or the issue of new securities was critical for the fund. Recent sales activity was positive evidence that a market existed for domestic industrial assets.
Mr Morgan estimated a cash injection would reduce gearing to 51.4 per cent before factoring in any earnings devaluation. But he said the low unit price meant there could be a cut in the distribution payout ratio to 65 per cent of distributable income.
"Our net asset value has been revised down to $1.02 per unit. We retain our underweight recommendation due to the impact that the restructuring of the balance sheet could have on valuation. Our June 2009 price target is reduced to 40c per unit," he said.
Carolyn Cummins
