As a further step in its strategy to expand its property funds management business, Australian Unity Investments (“AUI”) has entered into an agreement with Investa Property Group (“Investa”) to acquire the Responsible Entity for its retail funds business.
The business comprises three unlisted property funds: the Investa Diversified Office Fund (IDOF), the Investa Fifth Commercial Trust (I5CT) and the Investa Second Industrial Trust (ISIT), which has funds under management of more than A$430 million and collectively holds 12 office and industrial buildings across Australia.
Investa’s decision to sell its retail funds business was the result of a strategic decision to focus its business activities in the listed and wholesale capital environment via its two core funds – Investa Office Fund (ASX:IOF) and Investa Commercial Office Fund (ICPF), which together have assets under management of more than $4 billion.
The acquisition, when finalised, means that AUI’s property funds business will have almost $2 billion in funds under management, and follows AUI’s successful acquisition of the Diversified Property Fund from Westpac last year.
Mr Mark Pratt, general manager – property, mortgages and capital markets at AUI, said the additional funds complement the property funds that AUI already offers investors, as well as supplementing the skills of the AUI property team with the addition of key retail funds management staff from Investa.
“The acquisition is the latest step in our long-term strategy to grow our property funds business.
“The Investa funds add a substantial office portfolio to our sizeable retail, commercial and healthcare property funds, as well as augmenting our existing industrial property funds.
“This acquisition means we can provide investors with access to a broad range of property funds in all the major property sectors, and will add to the diversity and quality of our existing property portfolio.
“We believe it is a particularly opportune time to expand our office property activities, as our view is that core CBD office markets will continue to perform well due to sustained employment levels and lack of new developments, providing excellent opportunities for investors.
“The funds have performed well and delivered solid returns to investors, and one of our priorities will be to look at ways to enhance liquidity for investors in the funds,” Mr Pratt said.
Mr Scott MacDonald, Chairman and CEO of Investa, said that AUI was selected as the preferred future manager of its retail funds business as it met all of Investa’s stringent evaluation criteria.
“Following a rigorous sale and due diligence process, AUI was ultimately selected as the preferred future manager of Investa’s retail funds on the basis of its strong management experience and financial capacity, significant track record in managing retail property funds, resources to deliver on the fund strategies, and approach to corporate governance.
“We believe AUI has strong capability and the experience to continue to deliver on fund objectives, and will manage the funds in the best interests of unitholders,” said Mr MacDonald.
Investa was advised by Mr Bill Halmarick of National Australia Bank’s Property Equity & Advisory Team.