This article is from the Australian Property Journal archive
AFTER reeling from a surprise hostile takeover bid by Propertylink for Centuria Industrial REIT, Centuria Capital has unleashed its wrath by making an extraordinary move to overthrow the entire board of Propertylink, except the managing director.
Centuria has called a special meeting, where it will seek to remove directors Peter Andrew Lancken, Christopher John Ryan, Stephen Lawrence Day, Ian Farley Hutchinson, Anthony Damien Ryan and Sarah Kenny.
Centuria said it is seeking to replace each of these existing directors with independent new directors.
However, managing director Stuart Dawes is safe from Centuria’s wrath.
Centuria said it has lost confidence in the Propertylink board because the funds management platform has underperformed since listing and the board approved a strategy to excessively leverage Propertylink and attempt a hostile take-over of Centuria Industrial REIT (CIP) with Propertylink securities representing approximately 90% of the consideration.
Centuria claims the board has put Propertylink in an unsustainable position having increased its pro forma look-through gearing (estimated increase to approximately 49%) to pre-GFC levels in order to acquire its stake in CIP.
Centuria estimates that the transaction is 13% dilutive to NTA for Propertylink’s investors on a pro forma basis.
“After careful consideration, CNI (Centuria) has determined that it has no option but to act in order to protect its interests as a substantial PLG (Propertylink) securityholder, the interests of other PLG securityholders and the interests of CIP unitholders…” Centuria Capital CEO John McBain said.
“Since CNI’s friendly approach to the PLG Board in September 2017, CNI has remained a passive investor and has treated its investment in PLG as strategic. However, CNI is now concerned with the risks that the PLG board has taken in relation to the acquisition of a 17.7% interest in CIP and subsequent approach to acquire 100% of CIP,” he added.
“Over the last 12 months, PLG has been unable to grow external AUM and generate recurring operating profits in its funds management business. Its underperformance in growing recurring revenues has been accompanied with increased operating expenses which has negatively impacted the recurring/core profitability of the funds management business.
“PLG has relied on one off performance fees to generate a profit in the funds management business. We estimate that PLG’s funds management platform incurred a $1.9m loss in FY17 and $6.3m loss in FY18 when adjusted for one-off performance fees,” McBain said.
Centuria currently holds 22.9% of CIP units and, whilst it reserves its rights to change its intention, it is CNI’s current intention not to accept Propertylink’s proposal. If circumstances or structural developments cause CNI to accept, then CNI will become PLG’s largest securityholder with an 18.7% interest in PLG.
Centuria is one of Propertylink’s largest securityholders with a relevant interest of 10.9%.
Australian Property Journal
