Can Australian Unity Office Fund Close Final Property Sale Amid Settlement Default?
Australian Unity Office Fund reports a $35.6 million loss for FY25 as it advances asset disposals ahead of planned delisting, with the final property sale facing settlement uncertainty.
- Statutory loss of $35.6 million driven by $30.9 million property value decline
- Major property sales completed with special distributions to unitholders
- Final asset, 150 Charlotte Street Brisbane, faces purchaser default and delayed settlement
- Net tangible assets per unit dropped to $0.44 from $1.39 year-on-year
- Fund to delist and wind up following completion of asset disposals
Financial Results and Loss Drivers
Australian Unity Office Fund (AOF) has reported a statutory loss of $35.6 million for the year ended 30 June 2025, a significant improvement from the prior year’s $61.4 million loss but still reflecting challenging market conditions. The loss was primarily driven by a net fair value decrement of $30.9 million on its investment properties, underscoring ongoing valuation pressures in the office real estate sector.
Net tangible assets per unit declined sharply to $0.44 from $1.39 in the previous year, reflecting the impact of asset sales and valuation adjustments as the fund progresses its wind-up strategy.
Progress on Property Disposals and Distributions
Following unitholder approval in December 2024 to dispose of its main undertaking and delist from the ASX, AOF has made substantial progress in selling its property portfolio. Key transactions include the sales and settlements of 64 Northbourne Avenue in Canberra, 468 St Kilda Road in Melbourne, and 2-10 Valentine Avenue in Parramatta. These sales generated net proceeds of $21.2 million, $41.5 million, and $80.5 million respectively, with special distributions paid to unitholders totaling 73.4 cents per unit across the year.
Post these sales, the fund terminated its debt facility, leaving it with no borrowings as at 30 June 2025, a strategic move to simplify capital structure ahead of wind-up.
Uncertainty Surrounding Final Property Sale
The final remaining property, 150 Charlotte Street in Brisbane, has become a focal point of uncertainty. Originally contracted for sale at $61.5 million with settlement due in April 2025, the purchaser requested a deferral, leading to an increased sale price of $63.5 million and a postponed settlement to August 2025.
However, the purchaser defaulted on payment obligations by the August deadline, prompting AOF to issue a notice of default with a remedy period until 8 September 2025. In parallel, the fund received a revised offer of $54.5 million (inclusive of the $4.8 million deposit held) with settlement proposed for March 2026. This offer is under consideration, but the outcome remains uncertain, complicating the fund’s final wind-up steps.
Outlook and Next Steps
Given the unsettled status of the Brisbane property sale, AOF has refrained from providing distribution guidance for the upcoming period. The fund’s responsible entity continues to manage the orderly disposal of remaining assets and plans to delist the scheme from the ASX once all sales are concluded and proceeds returned to unitholders.
This transitional phase marks the final chapter for AOF as it ceases its real estate investment business and moves towards formal wind-up.
Bottom Line?
The resolution of the 150 Charlotte Street sale will be pivotal in determining the timing and value of Australian Unity Office Fund’s final distributions and delisting.
Questions in the middle?
- Will the purchaser of 150 Charlotte Street Brisbane remedy the default or will the contract be terminated?
- How will the revised offer for 150 Charlotte Street impact unitholder returns and wind-up timing?
- What are the implications of the declining net tangible asset value for remaining unitholders?
