Further talk has emerged in the market about the intentions of Dexus Property Group when it comes to AMP Capital, with some suggesting that the listed property group has its eye on the AMP Capital Diversified Property Fund.
It is understood that Dexus has written to the ACDPF responsible entity and put to it an unsolicited proposal to merge the fund with an existing Dexus vehicle, the Dexus Wholesale Property Fund.
It is believed Dexus is working with Greenhill, while AMP Real Estate Funds Management is working with Evans and Partners Corporate Advisory and Herbert Smith Freehills.
The proposal is understood to have been encouraged and welcomed by many of the existing investors within the AMP Diversified Property Fund.
The situation is likely to pose a dilemma for AMP, which needs to act in the investors’ best interests but is also considering other plans for AMP Capital, namely a demerger.
AMP Capital has $192bn of funds under management and some estimate it could be worth between $2bn and $3bn.
However, market analysts say that the value depends on the length of its contracts to manage the funds.
The ACDPF 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.
AMP Capital appointed Andrew Jeffs as the fund’s manager at the start of this year, replacing Brett Williams.
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, follows the controversial decision by AMP to appoint Boe Pahari as head of AMP Capital despite a $500,000 fine for sexual harassment.
Other senior executives have also left AMP Capital in a shake-up at the financial giant.
The situation will be repeating history for Ming Long, who chairs the AMP Capital real estate board, and director Peter Rowe.
Ms Long was fund manager of Investa Office Fund when Dexus made an attempt to buy the fund and Mr Rowe was an IOF director.
She clashed with the funds’ management who believed that the fund should not be sold for the price that Dexus was offering.
AMP on Wednesday said it was reviewing the group’s assets and businesses to “assess all options” for its strategy, including potential asset sales.
The Australian flagged last week that the financial had hired Goldman Sachs, along with Credit Suisse.
Previously, AMP counted Macquarie Capital and UBS as its advisers, and UBS was carrying out a review of AMP Capital late last year to assess the merits of a potential demerger, as revealed by DataRoom.
When it comes to an AMP break-up, most consider that the AMP Capital division is the easiest to divest.
Many consider the bank and wealth management operations difficult to separate given that much of the deposits in the bank come from the wealth manager, and a global private equity firm is unable to own more than 20 per cent of a bank.
Dexus in the country’s largest office landlord with a portfolio worth $14.2bn and also industrial properties worth $2.2bn.
It also has a real estate funds management operation that counts $3.3bn worth of shopping centres among its investments, $9.1bn worth of offices, $400m of healthcare-related properties and $2.7bn of industrial buildings.
DataRoom reported in July that Dexus, along with other property managers were believed to be in talks with the AMP Capital investors in a quest to take control of the funds within its $30bn real estate empire, along with other groups such as Charter Hall.
The challenge for Dexus will be convincing some of the country’s most powerful superannuation managers such as UniSuper and Sunsuper to switch their allegiances, and some say it is a difficult task for investors to change managers due to contractual issues.
Some investors are understood to have grown unhappy with their real estate returns at a time that shopping centre landlords face the prospect of lower incomes as retailers deal with COVID-19 trading restrictions and disruption from online sellers.
The acquisition of Indooroopilly Shopping Centre has also been controversial, with some suggesting that the AMP Capital Shopping Centre Fund and the AMP Capital Diversified Property Fund paid top dollar when they outlaid $800m for a 50 per cent interest in the property about three years ago.
Speculation emerged last year that property investors such as Charter Hall and Blackstone had their eye on AMP’s real estate empire, but this was dismissed.
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