This article is from the Australian Property Journal archive
AFTER five years of keeping the market guessing, will they or won't they, Stockland has officially ended its pursuit of FKP Property Group yesterday by selling its 11.6% interest for $103.5 million.
The sale ends another Matthew Quinn chapter in Stockland’s history, when the group and Lend Lease went head to head in a bid for FKP. In May 2008 Lend Lease made a $1.3 billion bid at $5 per security takeover offer to FKP and it was rejected FKP.
Several months after rejecting the bid, FKP encountered liquidity issues and its share price tumbled. It had been trading as high as $7.55 million between 2007-2008.
Stockland stepped in, in November 2008, buying a 5% stake for $2 per security and a month later it doubled its interest to 14.96%. As part of the deal, FKP granted Stockland first rights over its retirement assets.
Shortly after losing its bid for FKP, Lend Lease shifted its focus and made a $330 million bid for Babcock & Brown Communities Group, which was formerly Primelife, a pure play retirement village owner/operator founded by Ted Sent.
The sale was flagged by Stockland in August and yesterday it went through with it, disposing its 11.6% interest at $1.78 per security and will realised $76.5 million after taking into account of its participation in FKP’s recent capital raising.
At 30 June 2013 Stockland held a stake in FKP valued at $58.4 million. Since then the group has sold the whole stake through a combination of on-market sales and yesterday’s block trade for a total of $116.4 million.
“Completing this disposal demonstrates our firm commitment to the disciplined execution of our strategy. We will reinvest the funds released in our core businesses to maximise returns for our investors,” Stockland CEO Mark Steinert said.
As a result of the sale, the right of first refusal held by Stockland over FKP’s retirement assets has now also been terminated without compensation.
Yesterday FKP successfully completed the institutional component of its underwritten accelerated non-renounceable pro-rata entitlement offer at a price of $1.30 per security.
The institutional entitlement offer together with the institutional bookbuild, underwritten by Goldman Sachs, raised gross proceeds of $173.906 million for FKP, with 99.2% of FKP’s eligible institutional stapled securityholders, including Stockland, subscribing to take up their entitlements.
The proceeds will be used by FKP to repay short-term debt.
“We’re also pleased that Stockland has now executed on its intention to sell its stake and relinquished its right of first refusal over our retirement assets,” FKP CEO Geoff Grady said.
“This has not only opened up an exciting opportunity for new investors encouraged by our strategic direction, but resolves Stockland’s exit from our group in a very clear way,” Grady added.
Following close of the offer FKP will be geared at 19.3% and its debt levels will be further reduced as it progresses with sales of its $767m of non-retirement assets.
Herbert Smith Freehills advised Goldman Sachs and Minter Ellison advised FKP.
Property Review
