Shares in Commonwealth Property Office Fund (CPA) jumped 2.2% this morning to a 1.5 month high of $1.18 after Dexus Property Group (DXS) made a takeover bid for the fund.
Dexus, in partnership with the Canada Pension Plan Investment Board, is offering 68 cents in cash and 0.4516 Dexus scrip for every Commonwealth Property share it doesn't own, which equates to around $1.15.
CPA's responsible entity, Commonwealth Managed Investments, told the ASX it is currently considering an existing proposal from Commonwealth Bank of Australia (CBA) for the internalisation of management of CPA and that no action is required from its unitholders while it considers the competing bid.
The offer price represents a 0.5% discount to CPA's closing price yesterday and a 7.3% premium to its 30-day volume-weighted average price (VWAP).
If the takeover goes through, the consortium will acquire $3.7 billion in prime grade office buildings, creating a portfolio that is 58% based in Sydney.
While leasing conditions remain tough for office real estate investment trusts (REITs) across Australia's cities, Dexus is one of JP Morgan's preferred office stocks in the sub-sector because of its high exposure to Sydney's prime office buildings.
Dexus Funds Management owns close to 15% of the target.