This article is from the Australian Property Journal archive
AUSTRALIAN Unity Office Fund (AOF) and Australian Unity Diversified Property Fund (DPF) have outlined merger plans to create a $1.2 billion fund, and is looking to sign an implementation agreement within a month.
The Australian Unity Property Fund (AUPF) was first flagged in July when the Australian Unity Investment Real Estate Limited (AUIREL) announced the results of a strategic assessment that determined to maintain AOF’s focus on owning office assets in metropolitan and CBD markets.
AOF has nine assets worth about $672 million following the acquisition of a brand new Beenleigh office building home to Logan city Council, while the unlisted Australian Unity Diversified Property Fund (DPF) has 18 assets worth circa $540 million.
AOF unitholders will own 54% of the new fund, and DPF unitholders 46%.
The new fund would have a $735 million market cap. Its portfolio would bring in Ampol, Woolworths, Coles and Aldi as tenants, with a 97.0% occupancy rate and 5.7% portfolio capitalisation rate across 19 assets.
The 5.0-year weighted average lease expiry would represent an increase of 2.1 years from an AOF perspective.
Distributions for the current financial year would be 15.5c per security, a 2% increase for AOF.
As the name suggest, the AOF is mostly office assets with some office and industrial hybrid properties. More than one-third of the portfolio would be convenience retail assets, as well as pure industrial, with office still comprising just over half of the portfolio.
“The board believes AOF’s proposed merger with DPF, identified as part of its strategic assessment, will provide AOF unitholders with a superior investment proposition and enhanced sustainability of income returns, relative to AOF on a standalone basis,” AUIREL chairman Peter Day said.
AOF fund manager, Nikki Panagopoulos said AOF is targeting signing an implementation agreement and will update the market by mid-October.
“In addition, AOF management will remain focussed on driving an active management strategy to deliver leasing outcomes and execution of asset refurbishment initiatives to provide sustainable returns for unitholders.”
