UniSuper in frame over AMP property funds

Dexus wants to lock down local superannuation funds and international institutions that invest in Collimate Capital’s local empire.

There are already some challengers to a key element of the $28bn local funds business, with Mirvac looking to get due diligence to formally put a proposal to run the prized near $8bn AMP Capital Wholesale Office Fund.

On Thursday, investors voted overwhelmingly to update the fund‘s constitution and allow the manager to be changed with a smaller 50 per cent vote.

Big institutions are yet to show their hands, although UniSuper is already poised to send a $2.5bn-plus mandate to rival company GPT and could back Mirvac.

A UniSuper spokeswoman said it was reviewing AMP’s sale of the local real estate and infrastructure equity business to Dexus and was “considering any implications for the ongoing management of our … portfolio”.

Barrenjoey analyst Ben Brayshaw said Dexus had likely squeezed out Mirvac and GPT as potential contenders to manage the AMP office fund and said the acquisition accelerated its transition from an asset heavy office and logistics landlord, to a capital light fund manager.

He noted the low acquisition price may reflect challenges AMP faced to exit the platform, citing external interest in AWOF and fiduciary obligations to 12 pooled vehicles. He said some infrastructure mandates could be lost and fees rebased.

AMP on Thursday conceded the $3bn in lost funds under management disclosed for the local business would reduce its earn out from Dexus by $60m, while if it were to lose AWOF the payment reduced by a further $120m.

Macquarie analysts said the success of the transaction for Dexus “will depend on the ability to retain and stabilise funds under management, reduce costs and in time use the new relationships to organically grow”.

Macquarie estimates the AWOF accounts for about 44 per cent of property funds and if it were to shift management, retail would then compose 69 per cent.