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THE refurbished former Sinsov Building at 55 Market Street is being sold to Allco Commercial Real Estate Investment Trust for $72.5 million.

The refurbishment is slated for completion in the fourth quarter, upon which the purchase will also be completed. The acquisition price works out to $969 psf of net lettable area for the 999-year leasehold property and is being 'acquired on an attractive assumed property yield of 5 per cent', according to Allco.

The building is being bought with vacant possession. Allco Singapore, the manager of Allco Reit, has begun pre-leasing activities, and is confident it will achieve 'an early pre-commitment to at least 20 per cent of the property and expects to fully lease the property within 12 months from the date of completion of the acquisition'.

Allco said the purchase of the 16-storey building is expected to be earnings-netural in the forecast period of March 1 to Dec 31 this year, and yield accretive for the year ended Dec 31, 2007. The manager will receive a one per cent acquisition fee of $725,000.

Allco Reit will fund the acquisition through debt and internal cash resources. Following the purchase, the trust's debt/total assets ratio would increase from 33.9 per cent to 39.6 per cent. Allco Reit will obtain an issuer rating from a ratings agency before completing the acquisition in order to comply with Monetary Authority of Singapore requirements.

55 Market Street will be a 16-storey building with a basement level and a total net lettable area of about 74,788 sq ft - mostly offices and some retail space. Allco Reit is buying the asset from CP Grace One Pte Ltd, a special purpose vehicle set up in November 2004 to raise funds for the $50 million acquisition and refurbishment of the property, through the issue of three classes of bonds. Read Allco Reit's news release at business-times.asia1.com.sg