Suncorp Metway disposes of direct property

Suncorp Metwayis set to dispose of its stake in the Suncorp Balanced Property Fund as part of a restructure of its property holdings designed to reduce the proportion of direct property in its wealth management and general insurance investment portfolios.

The group today announced that the Investa Property Group would take over the management of the balanced fund in a move that would ultimately see Suncorp redeem its $248 million interest in the fund.

The completion of the deal with Investa is expected to reduce Suncorp Metway’s holdings in direct property from more than 10 per cent, to virtually zero.

The group will, however, retain a significant exposure to property overall through investments in more liquid listed vehicles.

“We’ve now completed the reduction of our direct property holdings, which will allow us to adjust the asset allocation in our investment portfolios and improve returns for all our policy holders,” Suncorp Metway chief executive Steve Jones says.

The deal with Investa is the second step in Suncorp Metway’s property restructure.

In August this year, Suncorp Metway offloaded its unlisted Retail Property trust into Lend Lease’s Australian Prime Property Fund.

Under the terms of the arrangement with Investa, Suncorp Metway’s holdings in the fund will be fully redeemed by the end of January 2003, with Investa initially investing $19 million into the fund to redeem immediately some of the units held by Suncorp Metway.

The fund, which will be renamed the Investa Commercial Property Fund, holds interests in three commercial office buildings - Kings Row, and State Law in Brisbane, and 1 Market Street in Sydney.

Investa, which will market the fund to wholesale investors, will progressively redeem over the next 12 months, at present book values, the remaining units held by Suncorp Metway.

Suncorp is expected to reinvest the proceeds of the redemption in listed property vehicles and other asset classes.