AMP Capital’s $5.4bn Fund Merged with Dexus

Investors in the $5-billion AMP Capital Diversified Property Fund have voted to merge with a $10.1-billion wholesale fund run by ASX-listed Dexus.

Dexus on Tuesday succeeded in a push to merge with the AMP Capital Diversified Property Fund (ADPF), after unit-holders of both groups voted in favour of the merger, with the finally tally well exceeding the required 75 per cent.

The vote came after an implementation agreement between Dexus and and ADPF, which was signed in early-March, to combine the two entities under a stapling agreement that included exclusivity arrangements.

The bid has been in the works since last year when Dexus stepped forward to take over running ADPF amid the ongoing turmoil across the broader AMP business.

It followed AMP chairman Debra Hazelton launching a “portfolio review” sales process for the company after taking the chair from David Murray.

The Dexus bid initially was met with push-back by AMP which moved quickly to retain control of the property fund, offering cuts to management fees and a plan for AMP to buy assets out of the vehicle to help fund redemptions.

AMP Capital head of real estate Kylie O’Connor said the company, which had also been in merger discussions with US investment manager Ares, provided an alternative proposal to its unit-holders, but the independent board committee recommended the Dexus proposal.

“While AMP Capital submitted a compelling alternate proposal with significant capital support, we respect our investors’ decision to seek the scale that the merged fund will provide,” O’Connor said.

“Real estate remains an integral part of AMP Capital’s Private Markets business, which is about to embark on a separation from AMP Limited.”

Dexus chief executive Darren Steinberg said the approved merger would help the company expand its own funds management business.

“Both sets of unit-holders have signalled their confidence in our abilities through their support of the merger proposal and welcome the ADPF unitholders onto our platform,” Steinberg said.

“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.”

ADPF mainly invests in the office, retail and industrial sectors, and holds a diverse mix of trophy assets nationally.

Its portfolio includes a 50 per cent stake in the $2-billion Quay Quarter Tower currently under construction in Sydney’s Circular Quay and the Westfield Warringah Mall shopping centre on Sydney’s northern beaches.

ADPF also holds a 50 per cent stake in the Westfield Booragoon Shopping Centre in Perth and shares interests with Dexus in 309-321 Kent Street in Sydney.

ADPF includes minority investments in two other AMP Capital managed wholesale funds—the AMP Capital Wholesale Office Fund (AWOF) and the AMP Capital Shopping Centre Fund (ASCF).

The vote could play into the future of the larger AMP Capital Wholesale Office Fund, which is assessing its management.

That fund has set up an advisory committee with advisory house Jarden Australia heading the process.