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Two funds owned by Dexus (ASX: DXS) and AMP (ASX: AMP) have reached an agreement to merge more than $15 billion worth of property portfolios, but the deal still needs to be voted on by unitholders.
The implementation agreement (IA) reached between the $10.1 billion Dexus Wholesale Property Fund (DWPF) and the independent board committee of the $5 billion AMP Capital Diversified Property Fund (ADPF) are the fruit of discussions over the past six months.
"ADPF is a strategic fit with DWPF's existing portfolio providing additional exposure to premium assets," DWPF fund manager Michael Sheffield said.
"The ability to merge this portfolio in a cost and capital efficient manner enables us to create a combined entity which delivers strong benefits to investors."
These sentiments were echoed by Dexus CEO Darren Steinberg.
"We are pleased to be able to make progress that will enable this merger to be voted on by both sets of unitholders," Steinberg said.
"This merger delivers further economies of scale from a management, procurement and leasing perspective across the platform and is strongly aligned with our objective of being the wholesale partner of choice."
Dexus' funds management division executive general manager Deborah Coakley said the company prided itself on its approach to corporate governance with a track record of delivering outperformance and supporting the investment strategies of capital partners.
"We look forward to adding further value to the merged portfolio and welcoming new investors to our platform," Coakley said.
For the merger to go ahead it will need to pass the 50 per cent threshold for DWPF unitholders and 75 per cent for ADPF unitholders.
DWPF is a diversified portfolio of office, retail and industrial properties located throughout Australia, including 80 Collins St in Melbourne, 100 Mount Street and MLC Centre in North Sydney, Carillon City in Perth and The Annex on 12 Creek Street in Brisbane.
ADPF's portfolio covers the same property segments with a "comparable" overall sector allocation, including investments in assets such as Quay Quarter Tower in Sydney which is currently under construction, 309-321 Kent Street in Sydney, Westfield Warringah Mall in Brookvale, Sydney, and Westfield Booragoon in Perth.
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