Investa Office Mulls Asset Sales as It Seeks to Boost Quality

Investa Office Fund (IOF) will aim to sell some properties as it seeks to improve the overall quality of its assets, incoming Fund Manager Toby Phelps said.

“Right now, we’ve got too many ‘tactical assets’,” such as smaller buildings and those in secondary or fringe locations, said Phelps, who stepped into the role on Feb. 1. “We’ll look over time to rotate out of that and reinvest proceeds into” higher quality properties.

Investa Office today reported a 47 percent increase in net income to A$172.3 million ($183.2 million) in the six months ended Dec. 31 from a year earlier. The fund also proposed spending as much as A$570 million, subject to shareholder approval, to buy stakes in two buildings in Sydney and Melbourne held by its manager Investa Property Group, which is owned by Morgan Stanley.

The fund is seeking to buy as much as 50 percent of the building that houses Deutsche Bank AG’s offices in Sydney’s city center, and a 50 percent stake in Telstra Corp.’s headquarters in Melbourne, both co-owned by Investa’s unlisted property fund.

“If unitholders approve those acquisitions, then we’ve made a substantial and material upgrade in the overall quality, along the lines of our first step in our overall strategy,” Phelps said. “After that, we’ll focus on upgrading and improving the remainder of the Australian portfolio.”

The trust has sold off three buildings in the U.S. and one in France as it seeks to become an Australia-only fund, it said today. It has yet to dispose of the Bastion Tower in Brussels and its 13.8 percent stake in the CBRE Global Investors-managed Dutch Office Fund.

Investa Office’s first-half operating profit declined to A$63.3 million from A$71.7 million a year ago. It will pay a dividend of 1.95 cents a share for the period, and said it expects a profit of 4.9 cents a share for the full year.

The shares fell 2.4 percent to 60 Australian cents as of 2:13 p.m. in Sydney. They are unchanged this year, compared with a 5.5 percent gain in the benchmark S&P/ASX 200 index.

To contact the reporter on this story: Nichola Saminather in Sydney at nsaminather1@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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