Westpac sells control of $400m property fund

No price was disclosed but under the deal Australian Unity will underwrite up to $10 million of a proposed $40 million rights issue that will be offered to existing stakeholders in the Westpac fund, which has $400 million in assets under management.

The deal will increase Australian Unity Investments' funds under management to about $1.7 billion. Its other funds are invested in healthcare and retail-specific assets.

The Westpac fund is an unlisted vehicle that owns 13 predominantly industrial and office assets, including a $32 million office at Parramatta, leased to ANZ, and an IGA distribution centre at Balcatta, Perth.

In February, Westpac said it was reviewing its property funds management platform, saying the strategy "includes investigating potential value-enhancing opportunities proposed by third parties".

Since then the bank has sold its Westpac Office Trust to Mirvac and will continue to review other assets in the property funds management division.

Rob Whitfield, the group executive for Westpac's institutional bank, said the transaction should prove attractive to unit holders because of the opportunity for liquidity and the lower refinancing risk for the Westpac fund.

David Bryant, the head of Australian Unity, said the deal would also establish liquidity in the fund via a series of three $10 million withdrawal offers during 2010-11.

Mr Bryant said investors were moving back to the unlisted, direct property funds management sector, which has proved less volatile over the past two years compared with listed real estate investment trusts.