TCorp, a significant player in Australia’s investment landscape, has been working behind the scenes regarding its stake in the $2 billion Australian Prime Property Fund (APPF) managed by Lendlease. This comes as the industry fund Hostplus has been vocal in its attempts to replace Lendlease with Mirvac as the fund’s manager.
During a recent unitholder meeting for the APPF industrial fund, only five out of fourteen investors attended, including TCorp, which holds nearly 11 percent of the fund. The meeting aimed to address a proposal led by Hostplus to remove Lendlease, but TCorp’s absence meant the vote failed to reach quorum for the second time. This result allows Lendlease, through its entity Lendlease Real Estate Investments Limited, to maintain control of the fund’s management rights.
Sources indicate that TCorp has been seeking buyers for its APPF industrial stake for several months, even as tensions escalated with Hostplus. The investment firm has marked its position for sale, indicating a shift in strategy away from pooled funds like APPF towards direct investments. Notably, TCorp is reportedly willing to sell its stake at a discount to its book value.
Both Lendlease and TCorp declined to comment on the situation when approached for information. TCorp’s departure from the APPF industrial fund reflects broader investor concerns over liquidity issues, fee structures, and pre-emption rights that allow existing investors to sell their stakes. In response, Lendlease has attempted to placate investors by clarifying its fee structure and selling off a mall located on the New South Wales (NSW) Central Coast to fund withdrawal requests.
Despite these efforts, the fund has faced scrutiny from ratings agencies, which have signaled the potential for a credit downgrade. Lendlease is actively seeking institutional investors willing to invest $350 million to buy out Hostplus’s stake in the APPF, although the specifics of such a transaction remain uncertain.
The ongoing situation is complex, with critical questions surrounding Hostplus’s intentions to persist in its campaign against Lendlease. Hostplus’s strategy involves a three-pronged approach, targeting votes at the APPF industrial, retail, and office funds. While the vote at the industrial fund has been cancelled due to the lack of quorum, the retail fund presents a more significant challenge due to its larger investor base.
As developments unfold, the dynamics between TCorp, Lendlease, and Hostplus continue to evolve, highlighting the intricate challenges within Australia’s property investment sector.
