AFM and McGrath Estate Agents have developed investment opportunities for high net worth investors.

Managing Director of AFM, Avi Naidu, said the managed funds are in direct response to enquiries from international clients.

The Australian Core Property Fund and Australian Strategic Equities Fund provide investors exposure to attractive Australian asset classes.

“Aura is delighted with the opportunity to provide our clients access to the new funds. We are confident that the SIV programme will have important added benefits on the broader Australian economy. The SIV is designed to attract both strategic capital investment and sophisticated entrepreneurs, which will invariably have a positive impact”, he said.

Recognising the importance of innovation in attracting foreign capital, AFM has appointed McGrath Estate Agents as strategic advisor to its Australian Core Property Fund. McGrath’s Founder and Chief Executive, John McGrath, will join AFM’s Senior Advisory Committee. The Committee will provide strategic guidance and non-binding advice to AFM’s asset management team, who will have ultimate responsibility for investment decisions. The Committee will guide the long-term strategy, focusing on macroeconomic and demographic trends.

“We are delighted to be aligned with a well-respected organisation such as McGrath. Having John McGrath’s industry knowledge and wealth of experience will be an invaluable asset to our Senior Advisory Committee. John brings keen market awareness and proven ability to identify strategic real estate investment opportunities”, he said.

Chief Executive of McGrath Estate Agents, John McGrath, said “Australia is a strongly preferred destination for overseas investors, so the early popularity of the SIV program is not surprising. Our role for the Property Fund is to ensure that the best possible property investments are sourced on behalf of the Fund. Our track record of watching market trends and predicting popular property locations will be leveraged by the Fund to provide its investors a market advantage.”

Mr McGrath joins Albert Ovidi on the AFM Senior Advisory Committee. Mr Ovidi is Chief Operating Officer of global real estate services firm Jones Lang LaSalle in the Asia Pacific Region. Based in Singapore with oversight of key Asia Pacific countries, Mr Ovidi is able to bring a unique perspective and insight into the needs of sophisticated investors based throughout Asia.

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The proposal to merge the two funds was developed by AUI, creating a $360 million property fund holding commercial properties in Sydney, Melbourne, Adelaide, Brisbane, Canberra, and Perth.
 
Mr Mark Pratt, AUI’s head of property, mortgage and capital markets, said investors strongly supported the proposal, with 89.8 per cent voting in favour.
 
“Australian Unity Funds Management, as the responsible entity, developed the proposal because it believes a merger of the two funds is in the best interests of SIT investors, as well as the existing investors in OPF.
 
“SIT was a closed-end syndicate that was due to terminate in June 2014. Through the merger we are providing investors an opportunity to maintain their exposure to quality commercial property investments, better diversify their property exposure, and have the opportunity to defer capital gains tax (CGT) on their investment.
 
“Having spoken with a number of investors, many of them expressed a desire to maintain their investment in the Australian property market beyond SIT’s scheduled termination,” Mr Pratt said.
 
As part of the proposal, 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.  This is in addition to around 46 cents per unit already returned to SIT unitholders since December 2006.

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AUI proposes merger of property funds

Australian Unity Investments (AUI) is seeking approval from investors in its Second Industrial Trust (SIT) to merge the trust with its larger, more diversified Office Property Fund (OPF). OPF is AUI’s flagship office property fund.
 
Investors in SIT will be eligible to vote on the proposal, which intends to create a $360 million property fund currently holding commercial properties in Sydney, Melbourne, Adelaide, Brisbane, Canberra, and Perth.  Investors will be able to vote via proxy or by attending a general meeting of investors on Friday 24 May 2013 in Melbourne.
 
SIT is a fixed term trust due to terminate in 2014, which will own a single property in NSW currently valued at just over $29 million at the time of the merger if approved. AUI assumed management of SIT when it acquired Investa Funds Management Limited in September 2011.  OPF already owns eight properties throughout Australia.
 
Mr Mark Pratt, AUI’s head of property, mortgage and capital markets, said AUI has spent several months researching the options available for SIT.
 
“Australian Unity Funds Management Limited, as responsible entity, believes the proposal is in the best interests of investors in SIT.
 
“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.
 
“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 (over 2014 financial year compared to a continued investment in the Trust), and regular capped withdrawal opportunities currently unavailable through SIT.
 
“The proposal also provides diversification benefits, through investment in a fund that currently holds eight properties across Australia with a broader range of tenants than SIT.
 
“If investors vote in favour of the proposal, their investment will transfer to the OPF with the dollar value of their investment remaining unchanged at the implementation date,” Mr Pratt said.
 
If the proposal is approved, 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.   They may also have the opportunity to defer any capital gains tax (CGT) on their investment by opting for scrip for scrip rollover relief.
 
Mr Pratt said bringing together investment vehicles is an approach AUI has used successfully in the past, for example when it converted five retail property syndicates and trusts into a single fund, the Australian Unity Retail Property Fund.
 
“Such an approach can give investors exposure to a number of quality, large-scale direct properties that their previous investment couldn’t provide. 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,” he said.

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Principal Real Estate Investors, the fourth largest institutional real estate manager in the United States, is among the greenest commercial real estate companies in the United States, according to Commercial Property Executive. The real estate publication’s annual ranking puts Principal Real Estate Investors in a class of companies forging the path for a sustainable future.

“It’s an honour to be recognised for our efforts in creating and implementing industry-leading green initiatives,” said Patrick Halter, chief executive officer of Principal Real Estate Investors. “We’ll continue to set the pace for institutional investors by optimizing building performance and reducing energy consumption.”

In 2010, Principal Real Estate Investors solidified a reputation for sustainable investment and property management with the Ten Pillars of Peak Performance, a program establishing environmental sustainability guidelines for property managers and joint venture partners that focuses on optimizing building performance and reducing energy consumption. More than 90 percent of the office buildings under management have completed some type of green building project, upgrade or improvement. This effort is projected to save approximately $12 million over the next eight years with minimal capital expenditures. The company’s focus on green initiatives has yielded impressive results:

• 3 percent reduction in energy consumption resulting in $1.2 million of savings.
• 24 buildings (more than 6.2 million square feet and $1.2 billion in value) are Leadership in Energy and Environmental Design (LEED®) certified, with an additional 68 buildings currently registered with the United States Green Building Council (USGBC) for LEED certification.
• Nearly 50 percent of the office buildings under management received the 2010 ENERGY STAR® designation and rank in the top 18 percent in the nation in building efficiency with an 82 overall ENERGY STAR rating.
• A company-wide commitment as an ENERGY STAR Partner to measure, track and improve energy performance.
• Becoming a signatory for the United Nations-backed Principles for Responsible Property Investment (RPI).

In 2009, Principal Real Estate Investors launched the Principal Green Property Fund I, LP, which is one of the first institutional commercial real estate funds to focus on investing in green properties. Additionally, the company’s core plus commingled fund ranked first among U.S. private property funds and sixth among global private property funds for corporate environmental policies and management2.

“Environmentally conscious building decisions offer investors a long-term competitive advantage over similar properties utilizing conventional practices and makes good business sense” said Halter. “The movement toward sustainable — or green — building practices is a structural change in the commercial real estate market, and we are committed to sustainable building practices throughout our portfolio.”

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In his new role, Mr Cannon is the primary contact for financial advisers in Western Australia and Queensland where he will be responsible for communicating the business’ offering in these markets and servicing and keeping the financial advisers and investors up-to-date on property markets. Mr Cannon joined Charter Hall in 2007 as Development Manager for the Group’s Brisbane operations.

Mr Richard Stacker, CEO of Charter Hall Direct Property said: “Brendan’s excellent relationships with the business community in Western Australia and Queensland, coupled with his knowledge and experience in property, means he is a great asset to the Direct Property business.

“Charter Hall is very positive about the opportunity in these two growth states, having historically had a solid support base for our previously launched property funds and having seen very good inflow of equity in our recent office fund offerings, including strong initial demand for our industrial fund,” Mr Stacker added.

Mr Cannon said: “I am excited to extend my four years with Charter Hall into the Direct Property business at a time when the property sector is showing early signs of what we expect will be a strong recovery phase. We are seeing increased investor interest in our high quality products and I look forward to working across Western Australian and Queensland – two states in which I represented in rugby for over eight years.”

Mr Cannon will be Master of Ceremonies at the Charter Hall Investor Forum, available to the more than 50,000 retail investors, to be held in September across all Australian states.

Mr Cannon is well known for his contribution to Australian Ruby Union having represented Australia in 42 Test Caps, 106 Super Rugby games and also his insightful commentary on Fox Sports.

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