AMP Capital's $7b office fund a merger candidate
AMP Capital’s flagship $7 billion unlisted office fund faces the prospect of being taken over and merged into a rival vehicle, an outcome which is expected to be included in submissions on its future from the country’s top fund managers.
The potential exit of the AMP Capital Office Fund, AWOF, would put more pressure on the embattled investment platform, whose private markets business – infrastructure equity, debt and real estate assets – is being readied to be spun off through a proposed ASX float by its parent, AMP.
It would also follow the fate of its sister fund, the $5 billion AMP Capital Diversified Property Fund, whose members voted last month to abandon their manager and merge with a $10 billion wholesale fund run by Dexus last month.
A small group of major property houses, such as GPT Group, Dexus, Stockland, Charter Hall and Lendlease along with Canadian-backed office landlord Investa, and international players such CBRE and Brookfield, are preparing proposals, due next week, as revealed by the Street Talk column.
The initial round of expressions of interest and presentation of credentials will be considered by Jarden Australia, which has been appointed to review options for the AMP Capital-run fund.
Initially it was thought the major fund managers were vying simply for management rights to run AWOF, whose portfolio includes stakes in some of the country’s best-known office towers, including Melbourne’s Collins Place and the Quay Quarter Tower in Sydney.
But, according to senior sources, it is expected some managers will up the ante, by sketching out both a standalone management proposal and a merger option. The latter could prove a more competitive option, with the creation of an enlarged office wholesale fund offering its wholesale investors the benefits of scale.
GPT Group, Charter Hall and Lendlease all manage unlisted pure-play office funds that could potentially be merged with the AMP Capital-run office fund.
Having won control of one AMP Capital-run fund Dexus remains an interested player. After last month’s transaction it took control of $584 million in AWOF units held by ADPF. The merger also brings under Dexus’ wing a $140 million investment in the AMP Capital Shopping Centre Fund, a vehicle that also might be pushed into play.
While the process managed by Jarden Australia has some way to go, the office fund’s fate ultimately rests with its powerful wholesale investors, who are understood, more than anything, to crave stability in their management.
