AMP Capital, manager of the Wholesale Australian Property Fund which was frozen in November 2008, has announced the fund is now liquid.  WAPF has assets worth $760 million comprised of 17 properties in Australia and New Zealand.

 

AMP Capital has released a disclosure document which sets out a transition period for withdrawal requests and a new investment management strategy.  Withdrawals will be funded from the sale of seven of the properties.

 

Changes to the investment strategy include new asset allocations. The minimum invested in direct property will increase from 25% to 50%, while maximum cash holdings will increase from 30% to 50%.

 

The document also announces that debt will be introduced as part of the fund’s capital management strategy.

 

‘Under the new structure, the Fund may use gearing (borrowing against the Fund’s assets) to meet its liquidity needs (such as funding withdrawals) or to acquire assets. We will aim to keep the gearing level to a target range of 0%-15%, but may range from 0%-25%, of the fund’s gross assets at the time of borrowing.’

 

Debt will not be drawn down until after 31 May 2012 and until the fund is in a position to pay the withdrawal requests received on or before 31 May 2012.

 

The document warns of the risk that the Fund could be wound up if withdrawal requests are received for more than 50% of units on issue as at 31 January 2012 or if the property sales program could not be completed within the target timeframe.  It also warns of the risks associated with the debt, and the possibility of the  fund becoming illiquid again at some time in the future as a result of inability to pay withdrawal amounts.

 

AMP Capital Head of Property Funds Management Chris Judd  said the fund has a strong track record over 27 years, delivering an average return of 9.25 per cent and he was looking forward to managing the next phase.

 

 “Property fundamentals remain steady and as we have seen before, direct property as an asset class performs well during uncertain economic times.”

 

 He said the fund’s philosophy will remain the same: “the fund will retain a strong income focus and low risk orientation. It will continue to invest in quality direct property assets and, as always diversification remains a key component.”

 

“We expect the fund will continue as  an open ended fund with the aim of delivering reliable income and long term capital growth to investors,” he said.

 

AMP Capital was appointed as investment manager for WAPF in November 2011,  except for the investment management of direct property which it will take over from Dexus on 31 May 2012.

 

The disclosure document is available here.