The race has started for the assets of Commonwealth Bank's property trusts, with Dexus Property Group emerging with a 14.9 per cent stake in Commonwealth Property Office Fund.
Dexus chief executive Darren Steinberg said CPA's $3.7 billion in assets, which include a majority stake in 5 Martin Place, Sydney, would be a "good fit" for the group. But Mr Steinberg, who was the former head of Colonial First State Global Asset Management, which is the direct manager of CBA's property trusts, ruled out an immediate takeover of CPA.
"At this point we have no intention of making a takeover offer for CPA," Mr Steinberg said. "The model we worked on with Deutsche Bank will allow us to be a long-term shareholder."
The deal gives Dexus the right to buy the underlying CPA units at a price of $1.1334 per unit, a 1.5 per cent discount to the fund's net tangible asset of $1.15 at December 31.
CBA effectively put its three real estate investment trusts - CPA, CFS Retail and the Kiwi Income Property Fund - into play when it announced it wanted to internalise the management of the trusts. They are managed by Colonial First State Global Asset Management, which is owned by CBA.
Each of the trusts has their own direct management with Charles Moore at CPA, Michael Gorman at CFS Retail and Chris Gudgeon at Kiwi Income.
Morningstar analyst David Ellis said any move to internalise the management of the trusts would require the approval of unitholders.
"At this early stage, we are positive on the internalisation proposal, but we await more detail on the financial impacts to CPA, if the proposal proceeds.
"We have long argued external management introduces fee leakage and conflicts of interest ... The internalisation proposal is at the early stages of consideration and our $1.10 fair value estimate is unchanged. At current prices the fund is trading at a 3 per cent premium to our valuation," he said.
CPA has a market capitalisation of $2.6 billion, CFS Retail's is $5.6 billion and Kiwi Income's is $NZ1.1 billion. Pricing for a funds management business is generally about 2-3 per cent of the total assets under management.