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 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 have funds under management of more than $430 million and hold 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 acquisition complements 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 chief executive officer of Investa, said 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.
About the funds:
Investa Diversified Office Fund (IDOF)
IDOF, an open ended fund, was established in 2005 and has more than $290 million in funds under management. It owns an interest in eight office buildings located in Sydney, Brisbane, Melbourne, Canberra, Parramatta, Adelaide and Perth , and was the first retail property fund to receive certification from the Responsible Investment Association of Australasia. IDOF has a gearing ratio of 45 percent and returned 10 percent for the year to 30 June 2011.
Investa Fifth Commercial Trust (I5CT)
I5CT was established in 2003 and is a closed-end fund with $97 million in funds under management. It owns an interest in three office buildings located in Adelaide, Perth1, and Sydney (North Ryde). I5CT has a gearing ratio of 11 percent and returned 25.5 percent for the year to 30 June 2011.
Investa Second Industrial Trust (ISIT)
ISIT is a closed-end industrial property that has almost $50 million in funds under management and was established in 2002. It owns two buildings in North Ryde, NSW and one property in Acadia Ridge, Queensland. ISIT has a gearing ratio of 38 percent and returned 7.8 percent for the 12 months to 30 June 2011.
About Australian Unity Investments:
Australian Unity Investments is the funds management arm of financial services, health and retirement living services provider Australian Unity. It has $11.9 billion in funds under management (as at 30 June 2011).
The property funds management business has more than $1.4 billion in assets under management (as at 30 June 2011). Australian Unity Investments’ unlisted property funds and syndicates own more than 60 properties in the healthcare, retail and commercial sectors, in Victoria, New South Wales, Queensland, Australian Capital Territory, Western Australia and South Australia.
About Investa Property Group:
Investa is one of Australia’s largest owners and managers of quality real estate controlling assets worth $9.5 billion across the commercial, industrial and residential sectors. Investa’s integrated property platform incorporates property services, funds management, portfolio management, asset management, development and sustainability.
With a long history of managing institutional grade office buildings in core CBD markets, Investa’s office portfolio comprises more than 60 buildings and is valued at more than $8.2 billion. Investa’s development pipeline exceeds $2.7 billion and includes more than 12,500 residential lots, and over 450 hectares of industrial land. Funds under management in its listed and unlisted funds total more than $4.4 billion, managed on behalf of more than 27,000 investors.
For more information please contact:
Mark Pratt (head of property, mortgages and capital markets, AUI) – 03 8682 4448
Emily Lee-Waldao (marketing and investor relations, Investa) – 02 8226 9378