Aviva Investors, the investment management arm of UK insurer Aviva, is to remove a UK asset manager from a mandate to manage a £460 million (€532 million; $711 million) industrial fund and plans to replace it with another.
The plan to change the asset manager of the Ashtenne Industrial Fund from troubled Warner Estates –which is going into administration – to Hansteen Holdings also involves a £50 million recapitalisation of the vehicle by Aviva in order to lower the loan to value leverage ratio of the fund to below 50 percent.
The Ashtenne Industrial Fund owns more than 14.6 million square feet of UK property, and was initially set up by UK property professionals Ian Watson and Morgan Jones in July 2001 when they were joint chief executives of Ashtenne Holdings, a public company. However, ownership changed hands when Ashtenne was later taken over by Warner Estates.
As part of that takeover Watson and Morgan were forbidden to operate in the UK industrial property market for a period of time and therefore set up Hansteen – an anagram of Ashtenne – in order to concentrate on European industrial property instead. When the non-compete term ended, they were able to start buying UK industrial assets.
Since then, Warner Estates has struggled. Aviva had been paying it asset management fees in monthly payments to help with cash flow, but has recently decided to return to quarterly payments under the original asset management contract. That decision has tipped Warner into receivership.
As part of the new agreement, which unit holders must approve, it is proposed that Hansteen will take a 26.3 percent stake in the industrial fund, including the proposed purchase of Warner’s current 5.3 percent stake and a further investment of £42.5 million in new shares in the vehicle.
Hansteen will receive an asset management fee, together with a performance fee related to total returns, payable following the sale of all the properties in the fund, it said today. Hansteen will also integrate the 95-strong Warner asset management team into its existing platform.
Andrew Appleyard, head of UK specialist funds at Aviva Investors, said: “Over the past few months we have carefully considered the options available to the fund given the financial position of Warner. The proposal for Hansteen to take over as asset manager and become a significant investor will provide a number of benefits.”
Morgan Jones, joint chief executive of Hansteen, said: “Ian and I are also personally pleased at the prospect of being reunited with our former business.”