Mirvac advances play for AMP Capital’s wholesale office fund

The wholesale office fund has told investors an independent committee is assessing the management takeover proposal.

The Quay Quarter Tower development at Circular Quay in Sydney is owned by several funds including the AMP Capital Wholesale Office Fund.

Mirvac is making good on its plans to disrupt wealth management company AMP‘s planned sale of its $2bn Collimate Capital business.

In a letter to investors, the near $8bn AMP Capital Wholesale Office Fund says it has referred the property company’s proposal to take over as manager to be assessed by a committee of independent advisers.

Mirvac is claiming wide support among the wholesale fund’s investors despite AMP selling the management platform of the entire local Collimate real estate and infrastructure business to property heavyweight Dexus for $250m last month.

The value of that transaction, including co-ownership stakes and earn-outs, could rise to about $1bn if AMP successfully transfers over all the funds to Dexus and it is able to keep its grip on them. The overall Collimate sale would go ahead regardless of what happened with AWOF, but a price adjustment may occur. Dexus remains confident that it will have the backing of investors, citing its extensive experience in the office market and in running pooled funds.

READ MORE:How AMP missed its Macquarie moment | Investors lean toward AMP deal with Dexus | AMP funds platform sale faces challenge from Mirvac

Mirvac is offering itself up as a cleanskin alternative with fewer conflicts, although it has not run a pooled office fund for such a large group of superannuation funds.

Mirvac has instead struck up partnerships with big global institutions including British fund manager M&G Real Estate and Chinese sovereign wealth fund CIC.

In a letter obtained by The Australian, the trustee of the AMP Capital office fund says it has written to an independent advisory committee – aided by investment bank Jarden Australia – which will assess the Mirvac plan against the Dexus offer.

“The AWOF trustee has requested that the IAC undertakes an assessment of both the Mirvac proposal and the Dexus transaction and provide a recommendation to the AWOF trustee,” the letter sent in early May said.

It detailed that the assessment process would involve meeting with investors to obtain feedback on the Mirvac proposal and the Dexus transaction and engagement with the two companies to ensure “there is a full understanding of all elements of the proposals, potential enhancements and key risks”.

The two schemes would be checked against criteria outlined in the initial assessment of managers undertaken last year. The process would ultimately give “a recommendation to the AWOF Trustee having regard to the best interests of AWOF investors (with the IAC’s recommendation to be provided to investors in due course)”.

It could be a drawn out process as the victor not only needs to lock in support of more than 50 per cent of fund investors, it must also deal with complex pre-emptive rights on some key buildings, including Sydney’s Quay Quarter Tower and the Commonwealth Bank building at the Australian Technology Park.

Mirvac is confident that it has a solution to these issues and that it also came through the ringer in the process run last year, where it was short-listed alongside AMP Capital and GPT. Dexus went out in the early rounds but it is also well-positioned as a co-owner of key assets.

Last year‘s process was marred by controversy and eventually resulted in a recommendation to the existing manager. But AMP’s dumping of plans to spin-off Collimate as a separate public company and instead carving it up by selling the local unit to Dexus and the US infrastructure equity operation to DigitalBridge reopened the way for rivals to pitch themselves as managers.

Already some big capital is leaving the platform. The GPT Group confirmed on Wednesday that its funds business was in talks to take on the running of about $2.8bn worth of malls and office buildings controlled by Collimate

Vicinity Centres has also written to the trustees of two AMP shopping centre vehicles which control about $6bn worth of assets, pitching itself as manager.

By contrast, rival shopping centre group Scentre has not written to the AMP trustees.

The companies declined to comment on Thursday.