AUI is proposing that its Second Industrial Trust (SIT) merge with its flagship Office Property Fund (OPF), with the SIT due to terminate in 2014.
If successful, the merger will create a $360 million property fund, with commercial properties in Sydney, Melbourne, Adelaide, Brisbane, Canberra and Perth in its holdings.
“A number of investors in SIT have indicated to us they would like to maintain their investment in the Australian property market beyond SIT’s scheduled termination in June 2014,” AUI head of property, mortgage and capital markets Mark Pratt said.
“As well as allowing investors to maintain their exposure to quality commercial property investments, our analysis has shown the proposed merger would bring a number of benefits to investors, including a higher forecast distribution and total returns… and regular capped withdrawal opportunities currently unavailable through SIT.”
Investors in SIT will be offered an initial $5.7 million capped withdrawal offer equating to approximately 25 per cent of SIT’s forecast net asset value at the withdrawal offer date.
SIT investors will also have the opportunity to defer any capital gains tax on their investment by opting for script for scrip rollover relief.
“Such an approach can give investors exposure to a number of quality, large-scale direct properties that their pervious investment couldn’t provide,” Mr Pratt said.
“This greater diversification, compared to the existing SIT, is likely to improve cash flow stability and deliver greater access to capital to support future growth.”
AUI assumed management of SIT when it acquired Investa Funds Management Limited in September 2011.
Investors will be able to vote via proxy or by attending a general meeting on Friday May 24 in Melbourne.
