Dutch-based bank ING has suspended distributions from its ING Real Estate Community Living Group (ILF) for the next six months, citing the deteriorating economic outlook.
The fund invests in aged-care accommodation and student housing.
ING says the slowing economy also forced it to halve its guidance for the
distribution from its ING Real Estate Entertainment Fund's (IEF), which owns a chain of 40 pubs and 15 clubs, across Australia and New Zealand.
ING Management, the entity responsible for ING Real Estate Community Living Group, said distributions for the December 2008 and March 2009 quarters would be suspended and a distribution of 1c per unit was forecast for the June 2009 quarter.
In August, the fund said distributions for fiscal 2009 would be 6c.
ILF said it would defer all uncommitted capital expenditure and would undertake a "whole of business" strategic review.
"These initiatives are designed to position ILF to meet the challenges presented by the deteriorating market conditions and a current uncertain economic outlook, an ILF statement said."
IEF said its guidance had been revised downwards, in line with cash earnings expectations to fall to between 8c and 9c a unit in fiscal 2009. IEF last financial year reported a basic loss per unit was 5.5c versus earnings of 37c.
IEF's distribution forecast for fiscal 2009 has been reduced to 5.5c per unit from 10.05c previously, and includes the December 31, 2008 distribution payment.
IEF said increased financing costs and greater downtime in two pubs caught up in the Pubboy liquidation had reduced earnings. Costs associated with the extension of convertible loan securities and the effect from a distribution reinvestment plan will also contribute to the fall in expected earnings.
CMC Markets analyst David Taylor said equity markets were not expected to recover until mid-2009 and this would affect fund managers, hedge funds and direct-return funds.
- AAP
