An advisory committee, set up to specifically protect the interests of investors, in the A$7bn AMP Capital Wholesale Office Fund (AWOF), will look at alternative options for the fund’s future.
Existence of the three-person advisory group has emerged as investors expressed concern over the future of AWOF, whose management will fall under the control of US-based Ares Management Corporation under the terms of a proposed joint venture with AMP.
The AMP group last Friday announced a non-binding agreement to form a 60-40 joint venture with Ares, which would see Ares take over the management of AMP’s asset management arm, AMP Capital.
Sources told IPE Real Assets today that AMP Capital had set up the committee because of interest in the real estate platform (including AWOF) that was coming in during the portfolio review last year.
“This was a decision by AMP Capital to ensure strong governance because the governance structure for AWOF is different than other funds, with no independents on the trustee board,” a source said.
AMP Capital has also appointed an investment bank, Jarden, to work with and advise the advisory committee, which includes Barry Brakey, former head of property at Future Fund, on alternative options.
Australian managers, including Dexus and Charter Hall Group, remained keen to take over the management of AWOF, owner of some of Australia’s best office towers.
A significant investor in the AMP Capital fund told IPE Real Assets: “We have been underwhelmed by the attitude of the company towards the interests of the investors over a number of decisions. (Then) all of a sudden we found out (last) Friday, like everyone else, that we have a new owner.”
Another large super fund investor said that, unbeknown to investors in the office fund, AMP had “quietly tried” to sell the property business last year.
“That sort of behaviour causes concerns to investors. We have no issue with the real estate team at AMP Capital. We rate them highly. It is about the governance structure of the group.
“We are happy that there is now an advisory committee, specifically for the office fund to make sure it has an input into the sale process of the business.”
The head of property at a super fund said: “There is a lack of liquidity and investors in unlisted AMP Capital funds could not leave, even if we wanted to. We don’t know what the future holds for us.”
He added that he was not familiar with Ares. “Will Ares be a good next step for us? We don’t know. But we need to get quality advice specific to our fund, and we want to know what alternatives are out there.”
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