UniSuper, Victorian Funds Management Corporation and Treasury Corp are believed to hold the cards for the future of AMP’s $7bn wholesale office fund, which some suspect could soon be in play by Charter Hall, Dexus and Investa.
The three real estate groups are all believed to be circling the fund at a time of growing doubt about whether Ares Management’s $2.25bn joint venture proposal for AMP Capital will proceed in its current form. Suggestions have surfaced that some real estate investors under AMP Capital’s $26.6bn property management platform are unsure about handing the US-based Ares the keys.
As earlier reported by The Australian, the $7bn AMP Capital Wholesale Office Fund has hired Jarden Australia to offer advice. UniSuper, VFMC and Treasury are understood to be the largest investors behind AWOF. While it is not expected that AMP Capital’s fund investors will have the opportunity to vote on the Ares transaction, the understanding is that investors are able to vote with their feet and take their investments to another manager.
It was a similar situation when Westpac sold its Hastings Funds Management business more than three years ago and infrastructure investors opted to take their funds elsewhere.
So far, the understanding is that Charter Hall, Dexus and Investa are the keenest to gain control of AWOF. AMP Capital’s $26.6bn worth of real estate under management includes $7bn of assets in the AWOF and about $5bn in the AMP Capital Diversified Property Fund.
The management rights for the ADPF fund are already set to be transferred to Dexus.
There is also a shopping centre fund worth about $3bn, while the remaining funds are linked to real estate investment mandates and investments with retail investors.
Of Ares global assets under management, 9 per cent is real estate. It entered the sector in 2012 and most of the investments are understood to be in opportunistic funds.
Dexus is the largest office landlord in Australia. Charter Hall counts former AMP Capital real estate boss Carmel Hourigan as its head of office.
AMP announced last week that it had agreed with Ares to create a $2.25bn joint venture and allow the group to take management control. Ares would own 60 per cent of the AMP Capital business, excluding its public markets operation, and AMP would own the remainder.
The plan is for Ares to pay $1.35bn for the controlling interest after walking away from a proposal to buy all of AMP for at least $6bn. It suggests AMP Capital, excluding public markets, is worth $3.15bn.
AMP and Ares have agreed to work toward a binding deal over a 30-day exclusivity period.
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