AMP hit by another fund loss as retail trust management set to go to GPT

AMP will lose the management rights of a real estate fund, one of its key retail trusts, to rival GPT.

AMP will lose the management rights of yet another real estate fund, one of its key retail trusts, with rival GPT to emerge as the vehicle’s manager.

AMP went into a trading pause on Friday and then announced it would lose management of the AMP Capital Retail Trust, after receiving a notice from the majority of unitholders of “their intention to move” management of the trust to an external entity.

GPT has been seeking to wrest control of the unlisted retail trust, which was part of AMP’s local real estate and infrastructure business sold to Dexus. The Australian revealed GPT had secured management rights to the AMP retail trust online on Friday, ahead of it being confirmed.

The AMP shopping centre trust owns Pacific Fair on the Gold Coast and a stake in Sydney’s Macquarie Centre, and the switch could set up a battle for AMP’s remaining retail assets.

GPT’s chief executive Bob Johnston said: “We are delighted to have been selected by Cbus Property and UniSuper to become the manager of ACRT and the property manager of Pacific Fair Shopping Centre.”

As the buyer of AMP’s local real estate and infrastructure assets Dexus is protected from the loss of management rights for the retail trust, given the transaction’s structure. Moves had been in the wings by GPT even ahead of Dexus buying the local property and infrastructure funds business, known as Collimate Capital.

Industry fund and investor UniSuper finalised the transfer of another $2.8bn property mandate to GPT this week.

“AMP respects the decision of the unit holders and will now be working with them to effect the transfer of the management rights,” the wealth company said in a statement.

“The decision to change manager does not impact the completion of the sale of the real estate and domestic infrastructure equity business to Dexus, which is now expected to complete by November.

“The earnout payable to AMP under the sale terms will reduce to approximately $20m, as a result of the ACRT management rights not transitioning to Dexus,” the statement said.

When the transaction between AMP and Dexus was initially announced the potential earn out for the seller was $300m, indicating a large dent in the total consideration that will be received.

As at July 31, the retail trust’s assets under management were $2.7bn. About a year ago, UniSuper and Cbus Property joined the AMP trust as investors.

AMP’s investors will be closely monitoring any developments at other funds that may now be shaken loose from the Dexus transaction, including AMP’s Community Infrastructure Fund, which has been in the sights of infrastructure investor Plenary.

AMP’s shares dropped 1.7 per cent to almost $1.15 on Friday, outpacing a 0.25 per cent decline in the S&P/ASX200.

Dexus noted the AMP announcement on Friday and said its deal to buy Collimate‘s local operations was structured to account for the final assets under management it would receive.

It will now pay a maximum potential price of about $275m, including a $250m upfront cash payment. The funds that are set to transfer to Dexus still amount to about $18bn worth of assets.

Dexus said it “remains focused on completing the transaction which positions it as a leading real asset manager”, noting its new capabilities and expanded product offer.

GPT has been in the frame to take on the management of the ACRT vehicle and is also separately proposing to merge its own wholesale shopping centre fund with the unlisted AMP Capital Shopping Centre Fund. Vicinity Centres is also vying take on the management of that fund.

UniSuper, which backed a $2.2bn recapitalisation of the ACRT vehicle alongside Cbus last year, has close ties with GPT.

On Thursday, GPT said it had started managing UniSuper’s $2.8bn direct real estate mandate. Retail assets in the UniSuper portfolio under management by GPT include Karrinyup Shopping Centre in Perth, Marrickville Metro in Sydney and Dapto Mall in Wollongong, and Malvern Central in Melbourne.

Office assets in that mandate include 7 Macquarie Place and a 25 per cent interest in Brookfield Place in Sydney, NSW.

In July, investors in AMP’s $7.7bn wholesale office fund voted to move management away from the company to rival Mirvac.

ACRT and the AMP Capital Shopping Centre Fund each struck a series of deals last year which left them with 50 per cent stakes in Sydney‘s Macquarie Centre and the ACRT with ownership of Pacific Fair on the Gold Coast.

Last December, AMP Capital and its superannuation fund partners took full control of two of the shopping centres in deals worth about $760m.

AMP Capital earlier this year won fresh backers in Cbus Property and UniSuper for the ACRT vehicle that held interests in the malls in a landmark $2.2bn recapitalisation.

Last December, the AMP-run funds bought out the minority stakes in the malls, which were sold off by a fund which Dexus took control of last year.

The ASCF acquired an additional 25 per cent stake in Macquarie Centre for $422.5m, valuing the asset at about $1.7bn. In a second deal, AMP Capital, together with UniSuper and Cbus Property purchased the remaining 20 per cent of Pacific Fair in Queensland for $336.4m, via the ACRT, also valuing the whole complex at about $1.7bn.

When the deals settled earlier this year it left ASCF and ACRT each holding 50 per cent of the Macquarie Centre, while ACRT will wholly own Pacific Fair.