Australian Unity to offload property fund

Tim Gurner and Qualitas have acquired the remaining interest of the Jam Factory from Newmark Capital and will develop a $2.75bn project.

Further signs are emerging of Australian Unity Wealth Management distancing itself from commercial real estate, with The Australian Unity Property Income Fund about to fall into the hands of a new owner.

Speculation in the market suggests Newmark Capital is taking over the fund, which has about $260m of commercial property assets, including in direct property, unlisted property trusts and Australian Real Estate Investment Trusts.

It has $79.7m of direct property assets, accounting for 28.9 per cent of the fund, including offices and industrial buildings worth under $30m in Victoria, Queensland, NSW and South Australia. Unlisted property investments account for 19.7 per cent of the fund in asset classes that include healthcare, retail and childcare and are worth $54.2m. It also has $103.9m of AREIT listed property investments accounting for 37.7 per cent of the fund and $37.6m of cash, accounting for 13.6 per cent of the fund.

Australian Unity’s negotiations with Newmark come after it hired real estate agents two years ago to offload assets in the $371.5m listed Australian Unity Office Fund.

The group had earlier planned to merge the Australian Unity Office Fund and Australian Unity Diversified Property Fund to create the Australian Unity Property Fund with $1.2bn of real estate. But the deal was shelved when it became clear it would not gain investor support.

Starwood lobbed a $486m takeover bid for the office fund before the pandemic early in 2020 equating to $2.98 per share and, in 2019, Charter Hall and Abacus Property Group put forward an acquisition proposal at $3.04 a share for the business that was later voted down by shareholders. Its eight properties were valued at $586.5m. After asset sales, the fund now consists of three offices in Brisbane, Sydney and Melbourne.

As well as the Property Income Fund, Australian Unity manages a Healthcare Property Trust and the Childcare Property Fund, which has 15 properties worth $87.15m.

Newmark manages properties including the David Jones property on Bourke Street in Melbourne, the Gateway Plaza Shopping Centre in Warrnambool, the Como Centre in South Yarra, the Brandon Park shopping centre in Mulgrave, the Tooronga Village shopping centre in Glen Iris and this year sold Melbourne’s Jam Factory for $180m to Qualitas for a new development.

This year, the owner of the Bunnings retail properties, the BWP Trust, took over the Newmark Property REIT in a scrip deal worth about $250m, gaining control of its $600m worth of assets.

In February, Australian Unity agreed to buy myHomecare Group for $285m.