Analysts have set their expectations for how the Dexus and AMP Capital property fund merger will roll out, with the real estate investor forecast to divest more than $1 billion in assets.
As declared on Tuesday, the investors of the $5.4 billion AMP Capital Diversified Property Fund (ADPF) voted to dump its manager and to accept a merger offer from Dexus, to join with its $10.1 billion Wholesale Property Fund.
Dexus will take over the management of the combined unlisted vehicle.
However, the AMP Capital fund currently has around $2 billion in redemption requests from unitholders.
Dexus has already signalled that after it has replaced AMP Capital Funds Management as the responsible entity for the property fund on Wednesday, it will seek to sell down a list of identified ADPF assets to meet the withdrawal requests.
It will also facilitate liquidity for ADPF investors by acquiring around $400 million in the AMP fund’s assets and pay for the costs of the merger transaction, totalling around $50 million.
In addition to the acquisition, Morgan Stanley equity analysts Simon Chan and Lauren Berry expect Dexus will divest around $1.6 billion of its assets over the next 18 months.
The AMP Capital fund has investments across the office, retail and industrial sectors. It currently owns a stake in Westfield Booragoon and 25 per cent in Westfield Warringah, both jointly with Scentre Group. It also owns a stake in Pacific Fair and Macquarie Centre.
Further, the portfolio has a 50 per cent interest in the Quay Quarter Tower in Sydney under construction, a 50 per cent stake in 309-321 Kent Street (with Dexus owning the other half) and minority investments in two other AMP Capital wholesale funds.
As noted by Dexus chief executive Darren Steinberg, the deal will expand the company’s funds management business, diversify the wholesale fund’s portfolio and investor base and solidify its position as “globally significant”.
“We will continue to execute on the fund’s investment strategy as we integrate the ADPF assets to drive performance and deliver further economies of scale from a management, procurement and leasing perspective,” Mr Steinberg said.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
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