This article is from the Australian Property Journal archive
THE world’s biggest private landlord, US-based Blackstone has made $3.14 billion all-cash offer for ASX-listed Investa Office Fund, in the latest and perhaps most decisive play in the eventful saga of IOF as takeover target.
The directors of Investa Listed Funds Management Limited (ILFML), the responsible entity for IOF, will unanimously recommend the proposal that is a 13.2% premium to IOF’s closing price of $4.55 on Friday, and 16.0% premium to its one-month volume weighted average unit price of $4.44.
IOF unitholders will receive $5.25 cash per unit, which will become effectively $5.15 per unit once the IOF’s second-half distribution is taken into account.
IOF had spent an extended period that lasted well into 2017 as the target of Cromwell Property Group, which was its largest single shareholder with a near-10% stake. Cromwell put forward rebuked bids of $2.73 billion and then $3 billion in a tussle that morphed into a public spat.
Cromwell eventually turned its attention to the European market, floating its Cromwell European REIT on the Singapore stock exchange late last year after having to slim down when investor interest fell short. Investa had raised doubts about Cromwell’s ability to fund the buyout when its initial bid for IOF was put forward in 2016.
Earlier that year, Investa rejected a $2.5 billion takeover attempt from Dexus, before it poached senior figure Penny Ransom from the group and announced her appointment as head of IOF just weeks later.
Investa announced to the ASX yesterday it had received an unsolicited, indicative and non-binding proposal from Blackstone on April 5 for cash consideration of $5.05 per IOF unit, taken up to the current offer following negotiations.
The offer is also at a 4.0% premium to IOF’s last reported NTA per unit of $4.95 at December 31 and a 3.9% premium to its forecast FY18 distributions per security yield. It is expecting to benefit from the strong Sydney office market conditions for some time.
The parties are now ironing out terms and steps to finalise the proposal, which will require approval from IOF shareholders and a binding scheme implementation agreement.
IOF said it had been informed by Blackstone that the private equity giant had not made a decision about the future management of IOF if the deal goes through.
“As part of its deliberations, Blackstone intends to discuss with Investa Property Group it potentially continuing the management of IOF due to its excellent track record in managing office assets in Australia; and that no facilitation or similar payments will be made by Blackstone to Investa Property Group as the owner of ILFML in relation to the proposal,” Investa said.
“The directors of ILFML believe that the proposal presents IOF unitholders with an opportunity to realise their investment in IOF for significant value and certainty.”
It said the ILFML directors would unanimously recommend the proposal, subject to an independent review and in the absence of a superior proposal.
JP Morgan is acting as ILHML’s financial adviser, and Allens as its legal adviser.
S&P Global Ratings said its credit rating for IOF of BBB+/Stable/– was unaffected by an all cash proposal from Blackstone to acquire IOF’s equity.
“We will monitor the transaction and determine the credit impact if the bid becomes final and binding. Key to our deliberations will be ascertaining what Blackstone’s intentions are for the current debt holders, the ownership structure, and IOF’s future operating strategy,” it said.
Blackstone has just acquired the VXV office portfolio in Auckland for NZ$635 million from Singapore’s sovereign wealth fund GIC and Goodman Property Trust, and has recently been reshuffling its Australian assets.
Last week, it sold the 11-storey, A-grade building home to Bendigo Bank at 80 Grenfell Street in the Adelaide CBD for $184.6 million, which it had acquired as part of a $400 million package that included Rundle Place in 2015.
The combined assets were part of the portfolio it attempted to offload last year, hoping for a price as high as $4 billion from the 10 properties, and it has just lobbed its near-77,000 sqm Top Ryde City shopping centre in Sydney’s north-western suburbs to the market with expectations of $700 million, after it paid receivers $341 million for the centre in 2012 and spent $90 million in refurbishments.
Mirvac and Charter Hall are currently squabbling over its 50% stake in Westpac’s Sydney headquarters at 275 Kent Street, valued at around $850 million.
Australian Property Journal
