AMP commits to flagship wholesale office fund
AMP’s funds unit has signalled its commitment to its flagship office fund as it prepares for a process that could see it take on a new manager to steer the $7bn wholesale trust.
The move is gaining pace in the wake of AMP agreeing to sell a controlling stake in its marquee capital division to US group Ares Management. That would see Ares try to turbocharge the overall funds management unit’s growth by forming a $2.25bn venture.
This broader play is coming under pressure as investors in some AMP Capital-managed funds consider charting their own course, including with “cleanskin” managers who are not weighed down by the scandals that have beset the financial services group.
In the case of the AMP Capital Wholesale Office Fund, an advisory committee comprising three real estate and corporate figures — former Future Future property head Barry Brakey, Wesfarmers director Sharon Warburton and property veteran Paul Say — has been set up to advise on options.
While AMP has declined to comment, the committee was set up in September last year as the real estate platform was garnering strong interest during the company’s portfolio review launched by chief Francesco De Ferrari.
AMP’s fund unit moved to boost governance arrangements for the office fund, which does not have independents on its board.
A memo from AMP Capital head of real estate Kylie O’Connor, obtained by The Australian, cited the quality and performance of AMP Capital’s real estate platform and acknowledged the trustees of the office fund were taking advice.
“While there is no formal process in place for AWOF, the Trustee Board recently appointed independent advisers to advise the trustee,” the memo said. “We have conviction in our platform and strong governance in place to ensure any approaches are assessed with the best interest of unitholders in mind at all times.”
Investment bank Jarden has been tapped to advise AMP Capital and could shift to a more formal process after soundings from rival property fund managers about the fund’s future.
AMP Capital has kept the focus on the performance of funds and mandates in its $28.6bn property unit. The office fund topped Mercer rankings and in the past two years to the end of December, although rivals have beaten it over the long term.
Industry players suggested that Ares involvement also could assist AMP clients as the US group has new products and investment opportunities for investors. Ares was active worldwide during the pandemic and raised more than $US40bn and deployed more than $US26bn last year.
AMP Capital is understood to have advanced an alternative proposal for the $4bn AMP Capital Diversified Property Fund.
A vote is expected in coming weeks and AMP is looking to hang on by cutting management fees, pouring in fresh capital and improving the fund‘s strategy.