The NSW government’s investment and financial management arm, TCorp, said it has withdrawn its A$1.6bn (€948m) property mandate from Dexus and awarded it to Lendlease’s funds management arm.

After more than 30 years, the current manager Dexus will cease to manage the bulk of what is known as the Australian Mandate, from 30 June.

A source told IPE Real Assets that Dexus had managed a total of A$2.2bn of assets in that mandate for TCorp. A$1.6bn worth of the portfolio was put out to tender and the remaining A$600m is under Dexus management.

In a separate statement, Dexus said that the mandate had achieved outperformance versus a benchmark over 1, 3, 5, 7 and 10 years.

The Dexus statement said TCorp remained a long-term investor on the platform via other vehicles.

The source said Dexus continued to manage about investment, totalling A$1bn, for TCorp.

It said the transition of the Australian Mandate was unlikely to have an impact on its distribution per security in this financial year.

IPE Real Assets understands that TCorp is reducing the number of external managers as part of its internalisation of investment management programme.

TCorp, which has A$108bn assets under management, said it has appointed Lendlease to provide advice in connection with its domestic diversified direct property portfolio.

Stewart Brentnall, TCorp’s chief investment officer, said: “We are delighted to be forming this new partnership with Lendlease, who were selected following a detailed, independent request for proposal (RFP) process.”

The objective of the RFP was to refresh the mandate in line with best-practice investment management, Brentnall said, adding that TCorp was impressed with the RFP responses from all shortlisted parties.

“We now look forward to working with Lendlease, and envisage this partnership will evolve and broaden over time, given Lendlease’s global footprint and expertise.”