AMP property fund in the hot seat as Dexus seeks control

The situation of AMP Capital Diversified Property Fund is becoming increasingly dire. Picture: Hollie Adams

As negotiations between AMP and its suitor Ares continue, the situation of AMP Capital Diversified Property Fund is becoming increasingly dire.

Apparently, if unitholders in the $5bn real estate fund do not accept the proposal for Dexus to take over as manager, the fund will be wound up and its investors offered redemptions.

Unitholders are finding that the alternative proposal put forward by AMP Capital to retain the fund is not satisfactory at a time that US-based Ares is in talks to take operational control of the unit.

The understanding is that when Dexus gains control of the fund, it will lower investor fees across its entire wholesale fund operations while reaping the benefits of scale.

Sources say fees for at least $10bn of funds managed would fall to 35 basis points from 40 basis points, although Dexus declined to comment on whether this was the case.

Ares has been working with AMP to finalise a deal to buy a 60 per cent interest in the private markets business within AMP Capital, which includes management rights to a lucrative platform of real estate funds such as ADPF.

The negotiating period for Ares to own 60 per cent of a $2.25bn joint venture with AMP was scheduled to end at the end of this month, and while it is likely to be extended, some think that the talks may end without a deal in place.

Elsewhere, there are plenty of developments in initial public offerings.

The Quadrant Private Equity-owned Grays Online will release its analyst research to the market on Monday for its IPO ahead of investor meetings.

Prospective investors are expected to be told earnings before interest, tax, depreciation and amortisation for the online auction house Grays are forecast to grow from $23.6m last year to $28.8m this year.

It will be interesting to gauge the shareholders’ reaction on value after Quadrant purchased the business in 2019 for $60m from Eclipx.

Also out next week is the path-finder for the IPO of Blackstone’s Milestone Logistics Group.

The industrial property portfolio is subject to a dual-track process.

However, most expect that Milestone will be sold to a property investor, given that five shortlisted parties are already said to have offered more than $3.5bn for the assets, making them out of reach for equity investors.