update

WSJ Today


By Bill Lindsay

Of DOW JONES NEWSWIRES

SYDNEY (Dow Jones)--Australian investment bank Macquarie Group Ltd. (MQG.AU) is looking to cut its ties with a number of its remaining listed satellite funds, saying Friday it is in talks to sell the management rights of some of its real estate assets.

Macquarie Group and property fund manager and developer Charter Hall Group (CHC.AU) said in statements Friday they are in discussions about the possible acquisition of parts of Macquarie's "real estate funds management platform".

Macquarie Countrywide Trust (MCW.AU) and Macquarie Office Trust (MOF.AU), the two largest listed real estate investment trusts managed by Macquarie subsidiaries, both said the acquisition could include their managers.

David Southon, joint managing director of Charter Hall, said his firm is also considering co-investment in those existing vehicles.

"This is not an asset play, we're a specialist fund manager and we see this as a logical extension to our existing business" by aligning the firm's interest with investors in the funds, Southon told Dow Jones Newswires.

The talks continue Macquarie's moves to distance itself from the listed funds model it pioneered over the last 15 years, as it chases further expansion in the U.S. and Europe and reshapes itself into primarily a global trading and advisory business. In the last seven months it has severed its management ties over separately listed funds that house airport, theme park, media and tollroad assets and has bought up a number of niche advisory and investment firms offshore.

Charter Hall and Macquarie said the acquisition talks are "incomplete and subject to a number of conditions", with no certainty that any transaction will proceed.

Southon said he is confident of an agreement.

"This one we think has a fairly good chance of moving forward given they're quality portfolios and quality people managing them, and it makes very good strategic sense" for both parties, he said.

Talks began last year and are expected to be finalized within a few weeks as Charter Hall continues due diligence on the management entities and teams Macquarie has in place and the composition of the funds, including asset, debt and income profiles, Southon said.

Macquarie's real estate funds management platform includes three funds listed on the Australian Stock Exchange and a number of unlisted property funds under its direct property management arm.

A spokeswoman for Macquarie would not comment on whether any of these other assets, including Macquarie DDR Trust (MDT.AU), a U.S. community shopping centre REIT managed jointly with Developers Diversified Realty Corp. (DDR), are part of the sale discussions.

Macquarie Countrywide owns stakes in over 200 supermarket-anchored retail properties in the U.S., Australia, New Zealand, and Europe, but is undertaking a A$2.3 billion asset sale program to deleverage its balance sheet and refocus on its core Australia and New Zealand markets.

The trust, which slumped over 90% in value during the global financial crisis, is midway through the sale of 86 properties in the U.S., around 80% of its assets there, for US$1.3 billion.

Similarly, Macquarie Office, which owns key office buildings primarily in Australia and the U.S., also shed over 95% of its value during the 15 months to March 2009, as stretched balance sheets and falling asset values forced it to sell assets and raise equity at depressed prices.

-By Bill Lindsay, Dow Jones Newswires; 61-2-8272-4694; [email protected]

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