This article is from the Australian Property Journal archive
MIRVAC is on a takeover roll in the new property cycle, launching a bid for the $390 million Westpac Office Trust.
Yesterday Mirvac and WOT entered into an exclusivity due diligence.
This is the second takeover for Mirvac in recent times, after the Mirvac Real Estate Investment Trust for $915 million in December last year.
Mirvac also announced a $350 million capital raising, managing director Nick Collishaw said the funds would allow the group to take advantage of opportunities in the real estate cycle.
In February this year, Westpac Funds Management Limited invited interested parties for a pitch and Mirvac has come up trumps, gaining exclusivity to buy all of the units in WOT. In addition, Westpac Bank has also granted Mirvac exclusivity to bid for WFML.
WFML yesterday said the discussions are non-binding, confidential and incomplete and that there is no certainty that the discussions will lead to a transaction.
WOT currently has a market cap of $390 million and has a real estate portfolio value of $1.14 billion. Although the trust is highly geared at 62%, it owns one of the best properties in Sydney CBD – the global HQ of Westpac Bank, Westpac Place at 275 Kent St which is valued at $720 million.
WOT owns a total of seven properties including the $240 million Woolworths NSO at Norwest, NSW; the $96.25 million IBM building at Pennant Hills, NSW; $23 million Honeywell complex and $17.75 million Westpac Bank tenanted property at Cannon Hill, QLD; a 50% stake worth $22.25 million in Westpac Bank property at Macquarie Park, NSW; and Westpac property in Bedford Park, SA valued at $17.80 million.
The acquisition will boost Mirvac’s assets under management to $6.7 billion.
Mirvac has announced a fully under underwritten Institutional Placement to raise $350 million which could fund this potential transaction as well as other activities within its busineses.
Collishaw said Mirvac is seeking to strengthen its balance sheet in preparation for future acquisitions.
“We are now at an opportune time in Australia’s economic and real estate cycle to acquire and develop investment and residential assets.
“Raising capital allows the Group to expedite the development of its existing commercial and residential project pipelines whilst enhancing the Group’s balance sheet strength and improving our credit metrics.
“We are actively seeking Australian investment grade assets in line with our portfolio, and looking to accelerate the development of Australian iconic residential apartments and large-scale, masterplanned residential communities,” he added.
Following the capital raising, Mirvac’s balance sheet gearing will reduce from 23.2% to 20.7% and liquidity will rise to $1.4 billion and cash on hand to $400.3 million.
And the capital raising is not expected to dilute FY10 EPS, which has been maintained at 9.2 cps DPS also remains unchanged at 8.0 – 9.0 cps. However it will dilute NTA from $1.65 to $1.63.
Mirvac is offering the placement at a fixed price of $1.40 per stapled security which represents a discount of 5.4% to Mirvac’s closing price on April 06.
WOT shares closed 6.53% or 5 cents higher at 82 cents yesterday and Mirvac shares rose 1.39% or 2 cents to $1.48.
Australian Property Journal
