Dexus set for top spot in office
Dexus and CPA went into a trading halt on Friday morning after a revised cash and scrip, suggested to be at $1.21 a CPA unit, was made to CPA's board for deliberation.
Dexus already owns a 14.9 per cent put option in CPA and made a joint share and equity offer with the CPPIB for CPA at an equivalent of $1.15 a unit in October.
The market value of CPA is $2.7 billion and it carries another $1 billion in debt.
But that offer was rejected by the chairman of independent directors of CPA, Colonial Managed Investment Ltd's Richard Haddock, as too low.
This week, CPA issued revised property valuations that increased the net tangible asset value to about $1.19, where it was before the trading halt, which increased the pressure on Dexus to sweeten its offer.
A successful bid would make Dexus the owner and manager of prime grade Australian office space worth $11.5 billion, and in one fell swoop give it a 26 per cent share of the Sydney prime grade office sector. Third-party assets under management, via the wholesale funds, would increase to $8 billion.
John Kim, real estate analyst at CLSA, said that after the deal Dexus' reputation would get an even bigger boost. He said the CPPIB was the eighth largest pension fund in the world, with $US178 billion of assets including $US22 billion in real estate, and has joint ventures with global operators such as Westfield, Simon Property and Goodman.
Frequently Asked Questions about this Article…
Dexus Property Group is aiming to become the largest office landlord in Australia by making a joint offer with the Canada Pension Plan Investment Board to acquire the Commonwealth Property Office Fund (CPA) for approximately $3.8 billion.
Dexus Property Group, in collaboration with the Canada Pension Plan Investment Board, has made a revised offer to the Commonwealth Property Office Fund (CPA) valued at approximately $3.8 billion. This offer includes a cash and scrip component suggested to be at $1.21 per CPA unit.
Dexus and CPA went into a trading halt after Dexus made a revised cash and scrip offer, suggested to be at $1.21 per CPA unit, which was presented to CPA's board for consideration.
The initial offer from Dexus, which was a joint share and equity proposal with the CPPIB at an equivalent of $1.15 per CPA unit, was rejected by CPA's independent directors as it was deemed too low.
Initially, Dexus, in partnership with the Canada Pension Plan Investment Board, made a joint share and equity offer for CPA at an equivalent of $1.15 per unit in October, which was rejected as too low.
If successful, the bid would make Dexus the largest office landlord in Australia, owning and managing prime grade office space worth $11.5 billion. It would also give Dexus a 26% share of the Sydney prime grade office sector.
CPA's revised property valuations increased the net tangible asset value to about $1.19, putting pressure on Dexus to improve its offer to be more competitive.
The market value of the Commonwealth Property Office Fund is $2.7 billion, and it carries an additional $1 billion in debt.
If successful, the acquisition would make Dexus the owner and manager of prime grade Australian office space worth $11.5 billion, giving it a 26% share of the Sydney prime grade office sector.
The Commonwealth Property Office Fund recently issued revised property valuations, increasing its net tangible asset value to about $1.19 per unit, which was its value before the trading halt.
Dexus's third-party assets under management, through wholesale funds, would increase to $8 billion if the CPA acquisition is successful.
The Canada Pension Plan Investment Board (CPPIB) is partnering with Dexus in the revised offer to CPA. CPPIB is a significant global player, being the eighth largest pension fund in the world with substantial real estate assets.
According to John Kim, a real estate analyst at CLSA, Dexus's reputation would receive a significant boost following the successful acquisition of CPA.
If the offer is accepted, Dexus would significantly boost its reputation and increase its third-party assets under management to $8 billion through wholesale funds.
Dexus is partnering with the Canada Pension Plan Investment Board, the eighth largest pension fund in the world, which adds significant credibility and financial backing to the acquisition bid.
John Kim is a real estate analyst at CLSA. He believes that Dexus's reputation would receive a significant boost if the deal is successful, highlighting the importance of CPPIB's involvement as a major global pension fund.
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