GPT bid may spark action

GPT Group will need to pay more than $3.1 billion to secure the office and industrial assets at Australand, some of which will have to come from tapping shareholders for cash.

According to analysts, if an offer is made, the real estate investment trust (REIT) sector is in for a renewed round of capital raisings in early 2013. This comes as some are still trading at a discount to their net tangible assets.

Investment managers have said they plan to increase their allocation to the REIT sector next year as returns are tipped to be higher than official interest rates. There is also the weight of money that is coming from compulsory superannuation, which is now heading back into property for its safe characteristics.

Aside from a forecast new round of mergers and acquisitions, the REIT sector will see a shake-up in strategies as new chief executives take over at Stockland and Mirvac. Both groups could look at becoming engaged in a new round of takeovers in the sector.

Deutsche Bank's Jason Wheate said even in the absence of a transaction materialising from GPT, the indicative offer will likely promote increased interest from potential bidders.

JPMorgan's Rob Stanton says an offer from GPT would need to be above $3.1 billion in order to impress Australand's main shareholder, Capitaland. That could include as much as $800 million in an equity issue.

Another broker speculated that Mirvac could take the remaining residential assets and merge with Australand, while DEXUS could make a counter offer for the office and industrial assets.