Australian Unity Investments proposes merging groups to create $461 million property vehicle

Funds management group Australian Unity Investments has proposed merging its Australian Unity Fifth Commercial Trust with the larger and more diversified, Australian Unity Office Property Fund to create a $461 million property vehicle.

The Australian Unity Office Property Fund (OPF) is an unlisted property fund, which owns eight quality office buildings in some of Australia’s major centres. It has a forecast total asset value of about $366 million in June 2014.  Australian Unity Fifth Commercial Trust (FCT) is a fixed term trust due to terminate in 2015. Gross assets within the trust stood at $95.61 million as at 30 September.

The purpose of making the merger proposal now, said Australian Unity, was to maximise the value of FCT’s remaining properties at 5 Eden Park, North Ryde NSW and 30 Pirie Street, Adelaide in South Australia - already 50% owned by OPF.

The merger would allow FCT to transfer its interests in both properties to OPF at an agreed valuation, removing "the reliance on the risks of a sale process, and involves no selling costs,” it said.

Australian Unity general manger of real estate investment Mark Pratt said the merger would provide investors with a cost and tax effective option to continue their investment in commercial property.

He also said that “OPF is forecast to provide higher distribution returnsthan those forecast for FCT, has greater diversification than FCT, and intends to continue providing regular capped withdrawal opportunities to investors.”

Australian Unity Investments is the $10 billion plus funds management arm of healthcare and retirement group Australian Unity.

FCT investors will be able to vote on the proposed merger at a general meeting scheduled for 11 December in Melbourne.

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