This article is from the Australian Property Journal archive
ABACUS and Charter Hall have joined forces to lodge an acquisition bid for ASX-listed Australian Unity Office Fund, after taking a 19.9% stake in trust earlier in the week.
Australian Unity Office Fund (AOF) has a portfolio of assets that lifted in value to $641 million over the first half, which includes A-grade assets at 30 Pirie Street in Adelaide and 150 Charlotte Street in Brisbane, as well as 468 St Kilda Road in Melbourne and 10 Valentine Avenue in Parramatta. It also revealed yesterday that application for a 28,000 sqm project at Valentine Avenue had progressed to gateway determination.
Last year, the fund was the subject of a takeover bid from Starwood Capital, to which it granted due diligence. However, the Connecticut-based investment firm downgraded its offer late last year after a closer look at the books, and AOF backed away from the deal.
Starwood Capital lowered its offer to $2.87 per unit from $2.95, despite not specifying any major concerns. Abacus and Charter Hall, who are being advised by JPMorgan, paid $95.6 million for their stake on Monday through at $2.95 per unit.
AOF went into a trading halt yesterday while the suitors publicly confirmed their interest.
Abacus and Charter Hall said they had established a special purpose entity for the acquisition and holding their interest in AOF, with both parties Abacus and Charter Hall owning 50% of the consortium entity, and have entered into a framework agreement in which the parties co-operate to pursue the acquisition of all AOF units.
AOF owns a portfolio of nine office properties located in five Australian capital cities that is “consistent with Abacus’ and Charter Hall’s investment objectives”.
“Both Abacus and Charter Hall are very familiar with AOF’s property portfolio, and the sub-markets that these properties are located in,” the groups said.
Under the proposal, AOF unitholders would retain a distribution of up to 3.95 cpu for the current June quarter. The offer of $2.95 per share represents a 6.1% premium to Monday’s closing price of $2.78, an 8.5% premium to its 30-day VWAP of $2.72, and a 10.5% premium net tangible assets per unit of $2.67 at the end of December.
AOF said in February that the peak of the office market’s cap rate cycle is imminent, and if not had already arrived.
The fund’s portfolio has no significant expiry in the portfolio until June 2022 – the New South Wales government’s tenancy at Valentine Avenue– and only two expiries of more than 1,000 sqm before January 2022, and with almost 60% of the portfolio leased high-profile tenants including Telstra, state and federal government, Boeing and GE.
AOF had having previously obtained development consent for an 8,000 sqm building at Valentine Avenue, but its plans have now received gateway determination from the Department of Planning & Environment, requiring the City of Parramatta Council to consult with community and public authorities over the project.
The fund is already seeking pre-commitments for the building, and said it has been shortlisted by one tenant for part of the proposed building and is in discussions with a number of other tenants seeking Parramatta space.
Australian Property Journal
