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Aventus Retail Property Fund to internalize management

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Aventus Retail Property Fund to internalize management

Aventus Capital Ltd., the responsible entity for Aventus Retail Property Fund, proposed to internalize the management of the Australian shopping center landlord.

The independent directors of Aventus Capital and external management APG, which is owned by entities associated with Brett Blundy and Darren Holland, agreed to give effect to the proposal, under which Aventus Retail will pay A$143 million to internalize its management and A$5 million to acquire the existing net assets of APG by setting up a new stapled security structure for the company.

According to an Aug. 10 announcement, the proposal will help in achieving immediate benefits for Aventus Retail's earnings and governance, as well as in creating long-term strategic value for its unit holders. Among other financial benefits, the proposed internalization would result in 1.1% funds-from-operations accretion and 4.0% adjusted FFO accretion to the company's fiscal 2019 results.

The proposed internalization will be financed via a combination of Aventus Retail stapled securities and cash from existing debt facilities. Aventus Retail noted that 57%, or A$85 million, of the consideration will consist of the company's stapled securities.

Following implementation of the proposal, Aventus Retail will own and manage an integrated platform consisting of interests in a portfolio of 20 large-format retail centers valued at about A$1.9 billion, bringing the company in line with the largest REITs in the Australian market in terms of structure and management. Every Aventus Retail director will also continue as director of the internalized group, with the company's key management to continue in its existing capacity following the planned internalization.

Aventus Capital's independent directors have already unanimously recommended the proposal, which is still subject to a number of conditions, including the approval of Aventus Retail's unit holders by ordinary resolutions at an extraordinary general meeting scheduled for Sept. 25.

Aventus Retail projects FFO-per-unit outlook for fiscal 2019 at 18.2 cents, but the guidance will increase to 18.4 cents per unit if the proposed internalization is approved.

Macquarie Capital (Australia) Ltd. and UBS AG's Australia branch were the financial advisers to Aventus Capital's directors, while Herbert Smith Freehills acted as legal counsel. Ernst & Young served as investigating accountants, with Greenwoods & Herbert Smith Freehills acting as tax advisers.