Australian Unity to launch office fund review, taps adviser

Photo by Norberto DUARTE / AFP

Australian Unity Office Fund’s management has hired Highbury Partnership for a strategic review of the listed landlord which could ultimately see one of its former suitors return with another offer.

The company said while delivering its results that a strategic assessment was underway after the office fund traded at a significant discount to its net tangible assets.

While delivering results on Tuesday, the fund’s responsible entity, Australian Unity Investment Real Estate Limited (AURIEL), said its directors had initiated a strategic assessment to examine all options to maximise returns and unlock value for investors.

Highbury’s appointment comes after it was also recently hired to work with fund manager Centuria on its efforts to buy Blackstone’s $3bn-plus Milestone Logistics Group.

Real estate banker Ben Roberts recently joined the firm from UBS where he also worked with Australian Unity Office.

Australian Unity Office said that the outcome and conclusion from the review would be communicated to the market over the coming months.

For the six months to December, Australian Unity Office Fund delivered a $20.1m net profit, down 13 per cent from the previous corresponding period as it wrestled with conditions linked to the coronavirus.

Australian Unity has been a fought over takeover target in recent years.

Starwood lobbed a $486m takeover bid for the fund early last year equating to $2.98 and in 2019, Charter Hall and Abacus Property Group put forward an acquisition proposal at $3.04 per share for the business that was later voted down by shareholders.

Hume Partners holds about 19.9 per cent of the fund and had been strongly opposed to a privatisation of the business.

However, Australian Unity Office Fund’s shares are now trading at $2.13 with its market value at $348.49m.

It is also worth noting that Hume, which represents the interests of the Scanlon family, has entered into a ‘put’ option with the Canadian property investor Northwest Healthcare Properties REIT to buy a strategic interest of about 16 per cent in the $2.4bn unlisted Australian Unity Healthcare Property Trust comprising 62 hospitals medical centres and other healthcare assets.

Some have taken this move as a signal that Hume was now open to breaking its loyal ties with Australian Unity as the manager of its real estate holdings.

Hedge funds also own shares in Australian Unity Office, while Singapore’s Keppel is a part owner of the responsible entity with Australian Unity.

Sources close to Abacus have suggested they are no longer an Australian Unity Office suitor.