Lendlease sees off Hostplus challenge to $2bn industrial fund

Erina Fair Shopping Centre is to be sold off as the battle rages for Lendlease’s funds empire.

Property company Lendlease has squashed a rebellion against its management of a key fund in the $10bn Australian Prime Property Fund empire as too few investors showed up to a meeting called to turf it out from running the industrial vehicle.

The incumbent manager has effectively won a fight for control of the $2bn industrial fund, seeing off a challenge that would have installed rival company Mirvac to run it. But it did so by the narrowest of margins, as only nine of 14 investors showed up to the meeting when ten were required to be present for a vote to be held.

The challenge to Lendlease was backed by two heavyweight superannuation funds, Hostplus and UniSuper, which account for about 38 per cent of the register. But for the second time in two weeks, not enough of the other funds showed up to support a switch of managers.

It is believed that those that stayed away include NSW’s TCorp and EquipSuper.

The fund will remain under Lendlease’s control but the register remains split between investors that wanted a change and those committed to the existing manager.

A spokesman for the Lendlease Investment Management independent Board Committee confirmed that a quorum was not reached at the second meeting.

“A quorum was not reached for the second consecutive week and as a result, under the Corporations Act the meeting is dissolved,” he said. “This outcome means the current responsible entity will remain in place.”

The industrial fund, one of three pooled wholesale property vehicles managed by Lendlease, had been viewed as the easiest to potentially switch over to Mirvac as Hostplus and UniSuper held the greatest sway over their register.

Lendlease will now be buoyed by the lack of support from smaller investors for a switch away from its management.

“We note today’s outcome, and remain focused on the fund’s performance and continuing to act in the best interests of all unit holders in our APPF series,” a Lendlease spokeswoman said.

The company has plans to double the size of the industrial fund and look at putting data centres on some of the key properties.

However, it leaves the industrial fund with a deeply divided register and the prospect of further conflict at Lendlease’s other funds including a $2.8bn retail fund where a meeting is due to be held next month.

A bruising fight for the retail fund is still to come, with Lendlease looking to reposition the fund by selling down its interest in NSW’s sprawling Erina Fair and readying to pay out redemptions.

It wants to overhaul the remaining four assets – which it does not manage but co-owns with rival groups – by putting apartments on the sites.

The result is a setback for the dissidents and came despite more than 60 per cent of the register wanting both a meeting to be held and a change of manager, sources said.

But two-thirds of investors, or ten funds, had to be present for the vote to be held and Lendlease had urged its own backers to boycott the meeting, sparking criticism of its hardball approach.

The manager now faces the prospect of Hostplus and other dissident superannuation funds putting in redemptions, which could effectively destabilise the existing platform.

Lendlease has been seeking to raise capital to buy out Hostplus from the funds but it is not known whether it has been successful, given the uncertain composition of the fund.