This article is from the Australian Property Journal archive
DISCUSSIONS with suitors have begun and Australian Unity Office Fund (AOF) is set to appoint agents to solicit sale proposals for its $586 million portfolio of metropolitan and CBD office buildings as it weighs up strategies to maximise shareholder returns.
Speculation has been mounting over the fund’s future after investors knocked back the proposed merger of AOF with the unlisted Australian Unity Diversified Property Fund, which would have created a portfolio of $1.1 billion.
Announcing a 3.2% increase in interim funds from operations to $15.6 million or 9.5c per unit yesterday, AOF said it is assessing three options for its future.
High on the agenda are refurbishments and repositioning, with the fund believing that major tenant lease expiry profiles at 10 Valentine Avenue, 30 Pirie Street and 150 Charlotte Street “provide a once-in-a-generation opportunity to refurbish and reposition well-located assets, to create core landmark properties”.
Also on the table are divesting some or all of its assets and returning capital to investors. Submissions have been received from real estate agents and are being assessed to determine if value may be maximised through the sale of one or more assets. AOF is poised to appoint agents in the second week of March to solicit sale proposals.
The third option is a portfolio sale via a corporate transaction. AOF has engaged Highbury Partnership as adviser and said inbound enquiries have begun.
“Engagement with several parties has already commenced, with confidentiality agreements signed and information being provided to enable parties to assess if a proposal for AOF or its assets could be put forward,” it said.
Fund manager Nikki Panagopoulos said, “We remain focused on maximising unitholder returns and will continue to keep investors updated.”
Shareholders had also thwarted a takeover bid from Charter Hall and Abacus Property Group in late 2019.
The fund’s half-year result was driven by fixed rent reviews and increased occupancy, up 1.2% to $96.9% over six months. More than 4,500 sqm, representing about 5% of the portfolio by net lettable area, was leased during the period.
It sold 32 Phillip Street in Parramatta for $66 million, a 5% premium to valuation, while it acquired a brand new Beenleigh office building home to Logan City Council for $33.52 million.
