Institutional shareholders in the listed Investa Office Fund have called on the managers to sell the business, with the cash raised given back to them for reinvestment elsewhere.
At what is likely to be the fund's last annual general meeting, Deutsche Asset Management's Danny Ekins called on Investa chairman Deborah Page to call an extraordinary meeting to allow shareholders to vote on a sale of the fund.
Morgan Stanley is selling the Investa management platform, which includes the management rights of the listed Investa Office Fund, said to be to the unlisted Investa Commercial Property Fund. The process has been long and the sale of the rights is the final piece of the divestment.
Alongside the Morgan Stanley sale, the independent board committee of Investa Office Fund, led by Ms Page, has been undertaking its own strategic review, which encompasses a range options, from internalising the management through to a deal with ICPF, to an outright sale of the business to another party.
Mr Ekins, whose fund has a small investment in Investa Office Fund, said the reality is that the fund's management is being "torn apart".
"In terms of a deal with ICPF, it is not acceptable for shareholders in Investa Office," he said.
"People are leaving Investa Office Fund. Perhaps it's advisable to sell the business and return the cash to shareholders and let them reinvest it elsewhere. I propose an extraordinary general meeting ... as shareholders would like it to come to a conclusion."
Ms Page said the IBC was "examining" all options but, given the complexity of the ownership structure, the board wanted to maximise value for all shareholders.
"In considering the ongoing management of Investa Office Fund, the IBC has investigated the ability to acquire its own management rights, which would result in a stand-alone internalisation of IOF and management independence," Ms Page told the meeting.
"Whilst not the "path to internalisation" as originally contemplated, such an internalisation would bring Investa Office Fund in line with other Australian Real Estate Investment Trust peers. Such a proposal requires the co-operation of the owner of the platform in order to be implemented in an efficient manner."
To further complicate the deal, Investa Office Fund has the benefit of an option over 50 per cent of the platform when the value of the Australian commercial properties reach $3.5 billion, allowing the fund to assess joint ownership on its merits when there is certainty around the ownership of the platform.
There were suggestions after the meeting that Morgan Stanley was to make a final announcement that could see it retain the fund's management. Morgan Stanley's spokesperson declined to comment.
Also at the sometimes-feisty meeting, the fund's manager, Ming Long, said Investa Office Fund's investment property portfolio, as at November 30, 2015, totals $3.495 billion.
"As we have demonstrated today and in the past four years, the diversified nature of IOF's portfolio continues to generate a sustainable earnings," Ms Long said.
"Underlying tenant demand, particularly in Sydney and Melbourne, continue to show good growth. The Brisbane and Perth markets remain competitive and whilst we have had some leasing success in Brisbane, we remain conservative about our leasing prospects, particularly in the next 12 months. One site is the fund's 151 Clarence Street, Sydney, where Arup is the new anchor.
"Continued strong appetite from domestic and offshore capital supports our view that capital values will continue to rise."
Ms Long said the improving market conditions gave the fund confidence in achieving the full-year funds from operation guidance for 2016 of 28.1¢, being a 1.4 per cent increase on 2015, and distributions of 19.6¢ per security.
