Dexus and Mirvac seduce investors in the AMP office fund

“The removal of an executive is a decision that is generally not taken lightly by investors.

“We will write to you shortly to explain why we strongly believe Dexus represents the best outcome for AWOF and unitholders, including providing additional information on fund improvements and their implementation.”

Mirvac and GPT were shortlisted as candidates to take over management of the office fund before an advisory committee last year ultimately recommended that its management be retained by AMP Capital.

Last November’s move proved controversial, prompting fierce criticism from investors at AMP Capital in February and a quiet invitation for Mirvac to rework its proposal.

Mirvac has improved on its initial proposal on several fronts, including obtaining an appropriate Australian financial services license to manage the fund. In addition, he defused the risk of the fund losing control of certain price assets, by obtaining waivers on the triggering of preferential bidding rights in the event of a change in management.

One of the competition’s targets will be management fees, after AMP Capital reduced its rate from a 50 basis point levy on assets to 25 basis points initially, returning to 35 basis points by the after. The rate offered by Mirvac for the fund is 30 basis points.

Another argument for AWOF’s investors – which include TCorp, Telstra Super, VFMC and UniSuper among others – is the ability for their fund to invest in Mirvac’s development pipeline and balance sheet assets without competition from others. Mirvac stable fund.

For its part, Dexus hopes to have countered this angle and others in a detailed 40-page overview for investors on its abilities as an office fund manager, including how it handles potential conflicts when competing for leases and tenants, using separate teams and rotating priorities. .

“While the rotation policy exists, it is rarely invoked, particularly in office sector opportunities, which tend to lend themselves to joint acquisition by multiple funds due to the size of the checks,” the document states.

Jose C. Birney