Australian Unity Office Fund Announces Proposal to Dispose of Main Assets and Delist
AOF (AOF) Share Update November 2024 Wednesday 20th
Australian Unity Office Fund Proposes Major Asset Sale and Delisting
Australian Unity Investment Real Estate Limited (AUIREL), as the responsible entity for the Australian Unity Office Fund (ASX: AOF), has announced a proposal to dispose of its main undertaking, including the sale of key properties and eventual delisting from the ASX.
Instant Summary:
- Proposal to sell main assets and cease real estate investment business.
- Sale of 468 St Kilda Road, Melbourne for estimated $41.75 million.
- Return of net proceeds to AOF Unitholders expected between $1.20 to $1.23 per Unit.
- Delisting from ASX and winding up of AOF expected post-asset sale.
Details of the Proposal
The Australian Unity Office Fund (AOF) is planning to dispose of its main undertaking, which includes selling its primary real estate assets and ceasing its investment business. This move is part of a broader strategy to return the net proceeds from these sales to AOF Unitholders and ultimately delist the fund from the ASX.
The proposal includes the sale of 468 St Kilda Road, Melbourne, with an estimated net proceed of $41.75 million, excluding disposal costs. AUIREL has entered into a non-binding Heads of Agreement with a potential purchaser, although the terms are not yet finalized.
Financial Implications
If the proposal is approved, AUIREL expects to return aggregate proceeds to Unitholders of between $1.20 to $1.23 per Unit. This includes a special distribution from the sale of 64 Northbourne Avenue, Canberra, which is expected to be paid by early December 2024.
The proposal also involves the return of net proceeds from the previously announced sales of 2-10 Valentine Avenue, Parramatta, and 150 Charlotte Street, Brisbane, with settlements expected in March and April 2025, respectively.
Delisting and Winding Up
Following the completion of asset sales, AUIREL plans to delist AOF from the ASX. The delisting is contingent upon Unitholder approval and is expected to occur no earlier than April 2025. The fund will be wound up after delisting, with any remaining cash returned to Unitholders.
The Extraordinary General Meeting for AOF Unitholders to consider the proposal is scheduled for 17 December 2024. AUIREL's directors unanimously recommend that Unitholders vote in favor of the proposal, citing it as the best option to maximize returns.
The proposed asset sales and delisting are significant moves that reflect the current challenges in the real estate market, particularly in the office sector. The return of proceeds to Unitholders is likely to be seen positively, providing liquidity and a clear exit strategy. However, the delisting will remove AOF from public trading, which may impact investor sentiment in the short term.
Investor Reaction:
Analysts are likely to view the proposal as a necessary step given the market conditions. The support from major Unitholders, who hold approximately 42.1% of AOF units, indicates confidence in the proposal. However, some investors may be concerned about losing exposure to the real estate market.
Conclusion:
Investors should carefully consider the proposal and its implications for their portfolios. The return of proceeds offers a clear exit strategy, but the delisting will end public trading of AOF units. Unitholders are encouraged to participate in the Extraordinary General Meeting and vote on the proposal.