Lendlease’s management of the $10 billion Australian Prime Property Fund (APPF) faces mounting scrutiny as TCorp, a significant investor, quietly seeks to divest its stake. This development comes in the wake of Hostplus, a $130 billion industry fund, leading efforts to replace Lendlease with Mirvac as the fund’s manager.
Last Wednesday, a crucial unitholder meeting for the $2 billion APPF industrial fund failed to reach quorum, largely due to TCorp’s absence. Sources indicate that TCorp was one of five out of 14 investors who did not attend the meeting, which aimed to vote on Hostplus’s proposal to oust Lendlease. TCorp holds nearly 11 percent of the APPF industrial fund and has marked its position as available for sale.
While TCorp has refrained from engaging in the Hostplus-led initiative, its dealmakers are reportedly shifting focus from pooled funds like APPF to direct investments. This strategic pivot may explain TCorp’s ongoing efforts to find buyers for its stake, reportedly at a discount to its book value. Sources suggest these efforts have been ongoing for several months, including during the recent tensions surrounding the fund.
Both Lendlease and TCorp declined to comment on these developments when approached. The APPF industrial fund has been under pressure from investors concerned about liquidity issues, fee structures, and pre-emption rights that allow existing stakeholders to withdraw. In response, Lendlease has attempted to clarify its fee arrangements and has sold a mall on the New South Wales Central Coast to meet withdrawal requests. However, a ratings agency has warned that the fund may face a potential credit downgrade.
In a bid to stabilize the situation, Lendlease has sought to attract institutional investors to contribute $350 million to buy out Hostplus’s position in APPF. The structure of such a proposal remains uncertain as Lendlease navigates the complex dynamics of its relationship with investors.
The ongoing situation raises questions about Hostplus’s commitment to its campaign against Lendlease. Initially, Hostplus’s strategy appeared to involve multiple votes across the APPF industrial, retail, and office funds. However, the vote at the industrial fund was canceled after failing to achieve quorum. The retail fund presents additional challenges, given the larger number of investors involved.
As the landscape continues to shift, the future of Lendlease’s management of the APPF remains in question, and the implications for investors are still unfolding. The intersection of investor interests and management strategies will likely shape the coming months for Lendlease and its stakeholders.
