INVESTMENT banking giant Macquarie Group will sever the last link with listed property trusts this month.
This, when it completes the handover of the EDT Retail Trust to its new US-based manager, ENP LLC.
EDT chief executive officer Luke Petherbridge said the trust was expected to remain an Australian listed company for the “foreseeable future”, but would not comment on whether it would be privatised and taken back to the US at a later stage.
EDT has US assets and US lenders, with the exception of one institution.
Mr Petherbridge restructured the trust after replacing the trust’s outgoing interim chief executive Simon Jones in April 2008, who was also co-head of Macquarie Real Estate Capital.
The trust breached loan covenants and its market value shrank from $1.3 billion to $22 million, as its unit price crashed to 2.4c.
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Problems also came as EDT’s tenants went into bankruptcy with the US economy plunging into a recession.
Its tenants — Mervyns department store chain, home furnishing retailer Linen ‘n’ Things and large electronic retailer Circuit City — filed for bankruptcy protection under Chapter 11.
At June 30 last year, 58 per cent of its loans were due to mature in less than a year; with a further 22 per cent with an expiry date of one to three years.
At present, EDT has a small loan of $US105m ($109m) due next year and work has begun to get it extended.
Its assets, valued at $US1.35bn were used to secure debt, totalling $US931.6m or 76.1 per cent gearing.
Mr Petherbridge said there was no debt at the corporate level, and all debt was secured on individual assets.
In the past year, EDT had repaid or restructured $1bn of debt, and its average date expiry had been extended to about four years.
A break came when a capital partner, EPN — a joint venture between Elbit Plaza USA and Eastgate Property LLC — came to its rescue.
Mr Petherbridge said EPN was identified during a strategic review on the future of the trust, which included the option of winding it up.
With its US investor agreeing to underwrite what was not taken up, EDT raised $208m from a rights issue.
EPN has a 47.82 per cent stake in the trust and a 50 per cent stake in the management company, jointly owned by the trust’s asset manager, DDR, the listed US company.
Mr Petherbridge said the US market had emerged from the trough but most of its tenants, such as Walmart, Home Depot and TJX Companies and Petsmart, had withstood the downturn.