Lendlease wins second round of $2b industrial fund stoush

Nine of 14 investors in the Australian Prime Property Fund Industrial turned up to the online and in-person meeting held at Lendlease’s Barangaroo office in Sydney, sources told The Australian Financial Review.

That was more than the seven that turned up last week to a first meeting called by the disgruntled investors, but still below the 10 required to hold a vote on the proposal to replace Lendlease as manager and install rival Mirvac.

For now, it means that the super fund’s push to install Mirvac in its place is over.

“A quorum was not reached for the second consecutive week and as a result, under the Corporations Act the meeting is dissolved,” said a spokesperson for the Lendlease Real Estate Investments Ltd independent board committee, which was overseeing the meeting.

“This outcome means the current responsible entity will remain in place.”

With only 14 industrial property fund investors that needed to be corralled to the meetings, Hostplus arguably faced an easier task this week than it will on Wednesday, when it will need to secure a quorum of more than 30 investors it has called to vote on management rights of the $2.8 billion APPF retail fund.

But equally, the retail fund has been more of a source of frustration for investors who have been unable to redeem units in that fund as freely as they would have liked.

The fund is in the process of selling its flagship mall on the NSW Central Coast to fund withdrawal requests from investors and ratings agency S&P Global last week warned that the fund faced a potential credit downgrade.

The ratings agency said the planned sale of Erina Fair would reduce the scale and diversity of the APPF Retail fund. At the same time, the extent of redemption requests that Lendlease will field from investors for an upcoming withdrawal window remained unknown, it said.

Hostplus declined to comment. Mirvac also declined to comment.

Lendlease acknowledged the result with a short statement.

“We note today’s outcome, and remain focused on the fund’s performance and continuing to act in the best interests of all unit holders in our APPF series,” a spokesperson said.

Lendlease has sought to calm investor gripes over the way it has managed the industrial pooled fund, as well as two others: the $2.8 billion retail fund and $5.8 billion commercial property fund.

Last week chief executive Tony Lombardo told the Financial Review that investors sticking by the company would benefit from strong returns and new assets – and a clearer fee structure than rival Mirvac, which is trying to wrest control of the funds.

The growing size of Australia’s large super funds means the balance of power has changed between managers and their investors, QIC’s managing director of real estate Deborah Coakley told the Financial Review this week.

While there was a growing range of structures, such as mandates or partnerships, by which institutional investors could invest in real estate and have more control in decisions about assets and fees, so-called pooled funds still hold an attraction for offshore investors or smaller ones who wanted to diversify their exposure, Coakley said.

But even these investors would still want greater control, she said.

“Investors will invest based on their own strategy,” Coakley said.

“They’re certainly not in a position where they want to be dictated to about what their options are. And they will gravitate towards managers who are agile and flexible in the way that they will invest with them.”