Cromwell Corporation has ended months of speculation by making an after-market close unsolicited, indicative, non-binding proposal for Investa Office Fund, valuing it about $3 billion.
It comes as the Investa Listed Funds Management Limited independent directors are also in negotiations to acquire a 50 per cent stake in another related entity, Investa Office Management, along with the Investa Commercial Property Fund.
Cromwell bought its current 9.83 per cent stake in April 2016, which thwarted rival bidder Dexus, which itself made a cash offer for IOF in November 2015. Dexus’ cash offer went nowhere as a result.
It has been one the longest-running battles for control of a large asset fund in the real estate investment trust sector.
Under the proposal, Cromwell has offered a cash price of $4.85 per IOF unit, which is inclusive of (and on Cromwell’s assumption) an anticipated distribution of 10?? per IOF unit for the half year period ending June 30, 2017.
The proposal is subject to a number of conditions including undertaking due diligence.
The receipt of the proposal follows discussions with Cromwell, led by chief executive Paul Weightman, since November 2016.
The IOF independent directors have not yet formed a view on the merits of the proposed takeover.
IOF has one of the more enviable office portfolios, valued at about $4 billion, in the country, including towers at 126 Phillip Street and 420 George Street in Sydney and 567 Collins Street, Melbourne. They also own an office at 259 Queen Street in Brisbane.
According to CLSA analysts, “while we consider Investa a good office manager, we have reservations about the independence of Investa Listed Funds Management Limited board, in our view of the need to maintain funds under management across the platform, but hold judgment until we see the IOF’s final proposal”.