AMP shelves real estate sale process

AMP has received a takeover proposal from California-based Ares. Picture: Hollie Adams

AMP is understood to have shelved the sale process for the management rights of its real estate operations within its AMP Capital business, say sources.

It is understood that parties interested in participating in a process were advised on Friday by the $5.9bn Australian listed financial group that the plan was no longer on the table.

Understood to be interested in the real estate was Charter Hall, Dexus Property Group, Lendlease, Vicinity Centres and the GPT Group.

The real estate arm owned by fund investors consists of high-profile properties 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 - all worth billions of dollars.

On offer to a party would have been the management for funds including those that own office buildings and shopping centres, such as the Wholesale Australian Property Fund and the AMP Capital Core Property Fund and it is thought that a successful party would need to write a cheque worth about $950m, based on the valuation estimates of analysts at JPMorgan.

AMP’s advisers, Goldman Sachs and Credit Suisse, were understood to have short-listed parties after the contest had moved into the second stage.

However, the process was believed to be complex.

It is understood that a number of parties were refusing to sign confidentiality agreements and had stopped working on a potential acquisition of the Australian real estate portfolio held within AMP’s investment arm.

It is also understood around the market that parties interested in the assets were being asked to adhere to conditions that prevented discussions with AMP Capital real estate investors.

Also said to be a condition was a standstill arrangement should a party emerge with an offer for the entire company, according to sources.

Some have speculated that the reason that the real estate process has been shelved is due to progress being made with private equity firm Ares Management, which has been in talks to buy the $6bn-odd wealth manager.

AMP confirmed in October it had received an indicative, non-binding, conditional proposal from California-based Ares to acquire 100 per cent of the shares in AMP by way of scheme of arrangement, and it is understood that the bid valued the company at $6.4bn or $1.85 per share.

Access was given to the AMP data room.

DataRoom understands that Ares had been interested in the AMP Capital arm and hoped to find a buyer for the wealth management and banking components of AMP.

Earlier, AMP had hired investment banks to assess options for the whole company as part of a strategic review.

The review followed a decline in performance following the Hayne royal commission findings.

In July, AMP Capital’s head of real estate, Carmel Hourigan, left to head up office investments at Charter Hall.

Her departure, and that of other senior executives, followed the controversial decision by AMP to appoint Boe Pahari as head of AMP Capital despite a $500,000 fine for sexual harassment.

While the real estate process is off, it is understood that Dexus Property Group is continuing with a potential plan to embark on a merger involving its Dexus Wholesale Property Fund and the AMP Capital Diversified Property Fund.

The AMP fund is believed to be worth between $4bn and $5bn.

It is understood Dexus has been offered due diligence on the assets.

It comes after Dexus in September wrote to the manager of the AMP Capital Diversified Property Fund with a proposal to merge the fund with an existing Dexus vehicle, the Dexus Wholesale Property Fund.

The ACDPF includes investments in buildings such as the Sydney’s Quay Quarter office and retail complex, and the Macquarie Centre and Pacific Fair shopping malls.

The proposal is understood to have been earlier encouraged and welcomed by many of the existing investors within the AMP Diversified Property Fund, many of which are the same that invest in the Dexus-controlled DWPF.

AMP Capital has $192bn of funds under management.

Dexus is working with Greenhill, while AMP Real Estate Funds Management is working with Evans and Partners Corporate Advisory and Herbert Smith Freehills.