WEEKLY WRAP: AUI proposes merger of property funds

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AUI proposes merger of property funds

Australian Unity Investments (AUI) is seeking approval from investors in its Second Industrial Trust (SIT) to merge the trust with its larger, more diversified Office Property Fund (OPF). OPF is AUI’s flagship office property fund.

Investors in SIT will be eligible to vote on the proposal, which intends to create a $360 million property fund currently holding commercial properties in Sydney, Melbourne, Adelaide, Brisbane, Canberra, and Perth.  Investors will be able to vote via proxy or by attending a general meeting of investors on Friday 24 May 2013 in Melbourne.

SIT is a fixed term trust due to terminate in 2014, which will own a single property in NSW currently valued at just over $29 million at the time of the merger if approved. AUI assumed management of SIT when it acquired Investa Funds Management Limited in September 2011.  OPF already owns eight properties throughout Australia.

If the proposal is approved, investors in SIT will be offered an initial $5.7 million capped withdrawal offer equating to approximately 25 per cent of SIT’s forecast net asset value at the withdrawal offer date.   They may also have the opportunity to defer any capital gains tax (CGT) on their investment by opting for scrip for scrip rollover relief.

As at 31 March 2013, the Office Property Fund has returned 10.04 per cent over six months, 9.61 per cent over one year, 6.96 per cent over two years and 7.35 per cent over three years*. If the proposal goes ahead, the combined fund is expected to have a higher occupancy rate (93.28 per cent instead of 88.45 per cent) and longer weighted average lease expiry (4.67 years instead of 1.69 years) than the SIT. It also has a lower management fee than SIT (0.7175 per cent p.a. instead of 1.025 per cent p.a.).

National Wealth Management Holdings appoints Elana Rubin to board

National Wealth Management Holdings Ltd chairman, Geoff Tomlinson, today announced that Elana Rubin has been appointed to the board as a non-executive director.

Rubin has extensive experience across the broad financial services sector having held senior positions and directorships across investment, insurance and wealth management industries.

Rubin is currently a director of Mirvac Group Ltd and PPB Advisory, and is also a member of the Federal Government’s Infrastructure Australia Council and Climate Change Authority. Rubin is a former chair of AustralianSuper and a former director of life insurance company TAL (formerly TOWER Australia).

A Fellow of the Australian Institute of Company Directors, the Australian Institute of Management and the Financial Services Institute of Australasia, Rubin is also a member of Chief Executive Women.

As a non-executive director of National Wealth Management Holdings Ltd, Rubin will serve as a director of MLC Limited and related companies.

Rubin will take up the board position on May 22.

CommInsure and RBF: New insurance product offering

CommInsure has bolstered its insurance offering for members of the Retirement Benefit Fund (RBF), Tasmania’s public sector superannuation fund, which will deliver greater benefits and more flexible insurance options.

The improvements, which were developed in partnership with RBF, will apply to existing Death, Total Permanent Disability (TPD) and Income Protection products for members of RBF’s defined contribution scheme, the RBF Tasmanian Accumulation Scheme.

CommInsure’s General Manager Wholesale Insurance, Claire Roberts said the product upgrade was significant in providing greater choice to members and will assist in ensuring adequate levels of insurance within superannuation accounts.

“In addition to the default ‘life stages’ cover held by members, which provides different levels of cover based on a member’s age, CommInsure now offers members ‘life events’ cover,” Roberts said.

“This option allows members to easily alter the level of coverage held within their super account using a simple application and without underwriting when they have a significant life event such as getting married or having a child.”

Members who hold insurance in other superannuation funds will now also be able to consolidate their insurance into their account with only a very limited underwriting process.

New COO for boutique wealth manager

Akambo Private Wealth today announced the appointment of Steve Wallis as Chief Operating Officer. Wallis brings his highly regarded business management skills and strategic insight to Akambo at a time when the Melbourne based wealth management business is entering an exciting new growth phase.

According to Akambo's Managing Director, Anthony Kapetanovic, "Steve has an impressive record in building and managing businesses, and I've no doubt he will be a major driving force in taking our business to the next level".

"The wealth management industry is going through a pretty exciting transformation as the big banks try to build scale at a time when we are seeing plenty of interest on self-managed superannuation. With over $1.6 trillion held in superannuation in Australia, I think a company like Akambo is exceptionally well placed to make a big impact in an industry that is dominated by a few major players", says Wallis.

Wallis is currently a director of Andrews & Wallis Group, which owns and manages dealerships in the Automotive Industry in the City and Northern Suburbs. He is also a well known sporting identity, having captained the Footscray Football Club (now the Western Bulldogs) in the VFL/AFL during a career that spanned from 1983 to 1996.

SuperTrace named SuperRatings ERF of the Year 2013

For the second year running, the SuperTrace Eligible Rollover Fund (SuperTrace) has been named SuperRatings Eligible Rollover Fund (ERF) of the Year.

Announced at the recent Conference of Major Superannuation Funds (CMSF) held in Brisbane, SuperTrace was also honoured with a Platinum Rating status which is awarded to funds regarded as offering the best value to members.

It’s the fourth year in a row SuperTrace has been awarded the Platinum Rating status. These prestigious accolades recognise SuperTrace’s long-term commitment to excellence and on-going consistency in performance in the ERF market.

According to the SuperRatings report, “SuperTrace remains the strongest ERF in terms of fees, returns and net benefit to members. This is complemented by a strong data matching strategy and over $130M in benefit payments in 2012. As a result, SuperTrace has been awarded the SuperRatings ERF of the Year in 2013.”

Australian 30-year bonds historically cheap

Long-duration bonds are good value at the moment and could help investors to make their portfolios less risky while maintaining their overall returns, according to Dr Stephen Nash, Director of Strategy and Market Development at FIIG Securities.

Nash argues that a number of factors have come together to cause a spike in the yields of Australian 30-year bonds compared to bonds with shorter durations of 10 years or less.

“The longer end of the Australian dollar fixed-interest-rate swap curve is relatively cheap on a historical basis right now so it represents good buying,” Nash said.

“While longer bonds can be very volatile, they tend to move in the opposite direction to equities so they can actually reduce overall portfolio volatility and the longer the bond, the better it works,” Nash said.

“Longer bonds also boost returns because they pay the investor for extra risk, so when they are cheap compared to shorter-duration bonds, the prospects for superior performance should be sound.”

Nash said that giving a portfolio a 50% weighting towards 30-year bonds could have a dramatic effect upon portfolio risk.

Endowment Bonds: A new ‘planning tool’ for savings and more income certainty

Endowment Bond Exchange Ltd (EBX) launched a series of zero-coupon bonds known as Endowment Bonds that can be used to establish a cash flow stream for up to thirty years in the future. They can only be purchased from the Endowment Bond Exchange website at ebx.com.au, where live prices in available maturities will be displayed every day.

Endowment bonds are a new financial product that are unique in the Australian retail market and are an alternative to an annuity.

Chief Executive Officer of Endowment Bond Exchange Ltd, Stephen Duchesne said, “Each bond, which is backed by State Government guaranteed bonds or wholesale bank deposits, has a standard pay-out of $10,000 each and matures on 30 June in the year that you select when you purchase it on the website.

“The purchase of a number of bonds with different annual maturity dates allows investors to create a sequence of future payments at times and amounts of their own choosing, including the start date which could be deferred many years into the future.”

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