By Andrew Starke

The ING Real Estate Entertainment Fund (IEF) has advised shareholders that its largest tenant by rental income, Icon Hospitality Management, will require assistance with it short-term cash-flow.

The assistance package follows industry speculation on the state of Icon’s finances with the measure representing the most formal attempt yet by the IEF to prop up its beleaguered tenant.

In March this year TheShout reported on INGs plans to assist Icon through refurbishments and rent assistance.

It also promised to waive rent increases until June 30, 2014.

However, IEF and Icon financiers have now agreed a $1.2m working capital assistance package for Icon which includes the fund deferring rent of up to $600,000 and the financiers capitalising interest up to the next $600,000, both until 31 December 2010.

The fund and Icon's financiers have made no commitments past this date when the working capital assistance package must be repaid by Icon.

“Whilst the Fund and Icon's financiers are providing a level of assistance there is an increased risk of Icon defaulting under its obligations to the Fund in the period before and after 31 December 2010,” said the IEF in a statement to the Australian Stock Exchange.

“The Fund, the financiers and Icon are reviewing Icon’s operations and management structures and have implemented some reforms which are anticipated to improve Icon’s position.”

The Icon group tenants nine of the 47 properties in which the IEF has an interest, all of which are in New South Wales.

The rent from these hotels represents approximately 44 percent of the Fund’s annual lease income.


The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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