AMP Capital’s shopping mall fund has turned in a $517.8 million loss after hefty portfolio write-downs because of the pandemic disruption, as the investment house struggles to bring ructions across its investment management business under control.
The release of the $3.6 billion fund’s financial result through the corporate regulator coincided with another dramatic development for its ASX-listed parent, AMP, with the resignation on Thursday of its chief executive Francesco De Ferrari.
While the AMP Capital Shopping Centre Fund’s overall return for the 2020 year of negative 15.7 per cent is no worse than its many of its peers, the result comes amid a period of turmoil for the investment manager, which is fighting off an attack on another of its property funds and which is under pressure to retain its investment mandates.
Adding to the drama, AMP is on a tight deadline to lock in a $1.35 billion deal that would hand New York-based Ares Management a 60 per cent stake in AMP Capital’s private markets business.
The AMP Capital’s retail property fund holds stakes in prominent shopping malls including the Macquarie Centre and Westfield Warringah in Sydney along with Indooroopilly in Brisbane.
The 2020 result deepened the $103.1 million loss it posted a year earlier, with much of the carnage sheeted home to effects of the COVID-19 disruption. Property revenue fell as rent waivers and deferrals were allowed its tenants, while it booked a $397 million write-down on its portfolio.
“The COVID-19 pandemic has significantly impacted the operations of the group, as well as the operations of certain tenants,” the fund’s financial statement noted.
The uncertainty caused by the disruption affected its efforts to determine property valuations, including how forecast future rental income could hit by COVID-19, it said.
By comparison however the fund’s overall return bettered the MSCI/Mercer benchmark for unlisted retail funds of negative 16 per cent.
Nevertheless, the result comes as the investment house battles to retain control of the $5 billion AMP Capital Diversified Fund, whose unitholders are due to vote next month on a rival offer th merge with a $10 billion Dexus-run fund.
In an effort to secure support from its investors, AMP Capital has promised to cut management fees and tip as much as $800 million in fresh capital from its parent, AMP, into the diversified fund.
In an unusual move a portion of of that capital injection would come through acquiring stakes in some of the fund’s flagship malls.
The battle for the diversified fund is just one of a several sore points across AMP Capital’s $28 billion real estate business. Multibillion-dollar investment mandates with Sunsuper and Swiss Re are being wound up while there is disquiet around the $7 billion AMP Capital Wholesale Office Fund as well.
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