AMP is understood to have made a last-ditch effort to retain its $4 billion-plus AMP Capital Diversified Property Fund, which looks increasingly likely to fall into the hands of Dexus Property Group.
It comes as investment bank Jarden Australia has been hired by investors in AMP’s other real estate fund — its $7bn-odd AMP Wholesale Office Fund – to provide advice.
Speculation suggests Jarden will be running a process to assess offers for another party to become its manager, with one of the fund’s major investors, UniSuper, believed to be driving the move for change.
It is understood that AMP has put a revised proposal to ADPF shareholders in the past week that centres on redemption payments to investors.
However, expectations are that Dexus Property Group will surface as the fund’s new manager, with an announcement thought to be due within the next few days.
AMP is facing competition to retain the management rights of its real estate funds as their investors remain wary about their prospects of Ares Management taking control of the AMP Capital division.
After initially putting forward a $6.4bn indicative bid for AMP, Ares has instead agreed to buy the majority of AMP Capital’s private market business which will see it control all of AMP Capital’s $26.6bn property management platform as well as its infrastructure arm.
But some real estate investors are said to be nervous about its credentials.
Of Ares global assets under management, 9 per cent is real estate., a sector it entered into during 2012, and most of the investments are understood to be in opportunistic funds.
The Greenhill-advised Dexus is the country’s largest office landlord and put forward a proposal to the fund’s manager for a merger with its own Dexus Wholesale Property Fund around the time that Ares was circling.
The approach is said to have been well received by the fund’s investors, many of which are the same that invest in the Dexus-controlled DWPF.
Evans and Partners Corporate Advisory and law firm Herbert Smith Freehills have been considering the merits of the proposal for the fund’s manager.
ADPF includes investments in buildings such as Sydney’s Quay Quarter office and retail complex at Circular Quay and the shopping malls Macquarie Centre in Sydney’s north and Pacific Fair on the Gold Coast.
Its properties are understood to be worth at least $4.5bn.
Dexus put forward a formal offer on December 21, while AMP Capital also put forward a proposal, outlining why the ADPF investors should retain AMP Capital as its manager.
It is understood that AMP Capital’s first proposal involved an offer that would enable investors, which include powerful superannuation funds such as Sunsuper and UniSuper, to cash in some of their units in the fund, should they wish to do so.
The understanding is that AMP Capital’s initial proposal involved buying some of the direct interests ADPF owns in other funds.
The offer involved providing liquidity in the fund and reducing the number of investors from down to a handful of major players, enabling others to exit.
Market experts believe that the Dexus offer is more compelling.
Meanwhile, AMP and Ares have agreed to work toward a binding deal over a 30-day exclusivity period for the AMP Capital assets.
The proposal values the joint venture at $2.25bn and puts a value on AMP Capital of about $3.1bn.
It sees Ares take management control and own 60 per cent of the AMP Capital business, excluding its public markets operation, with AMP owning the remainder.
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