Investa looks closer to home with funds
Under the deal, IOF divested the long-running investment in DOF to a consortium of existing DOF investors for €155 million ($164.3 million).
The deal has been under way for some time as the investment was considered non-core for Investa. It was a minority stake with no management influence.
The deal was done at about a 24 per cent discount to the DOF net asset value.
The analysts at UBS said that while pricing was below their expectations (about 10 per cent), the sale had come earlier than anticipated.
"Ultimately, IOF will be judged on the redeployment of gearing capacity (gearing now 24 per cent v 29 per cent prior) into domestic acquisitions. Acquisitions of $400 million of Australian assets can offset the earnings dilution," the analysts said.
Investa Office Fund is an office sector-specific listed real estate investment trust. IOF has total assets under management of $2.5 billion with investments located in core CBD markets in Australia and select offshore markets in Europe.
JP Morgan's analysts said the stake had been a deterrent for investors during the past five years, but they said the sale was a "major positive for the long-term performance of IOF".
"Proceeds from the transaction were used to pay down all European debt, reducing gearing to 24 per cent, below IOF's 25-35 per cent target gearing range," the analysts said.
"This provides IOF with about $300 million of capacity for domestic CBD acquisitions."
Frequently Asked Questions about this Article…
Investa Office Fund sold its stake in the Dutch Office Fund to remove uncertainty about the future of the holding and to free up cash for reinvestment into higher-quality Australian assets.
Investa Office Fund sold its stake in the Dutch Office Fund to eliminate uncertainty about the future of the holding and to free up cash for reinvestment into higher-quality Australian assets.
The stake in the Dutch Office Fund was sold for €155 million, which is approximately $164.3 million.
The stake in the Dutch Office Fund was sold for €155 million, which is approximately $164.3 million.
The market welcomed the sale as it removed uncertainty and allowed Investa to focus on domestic investments, which is seen as a positive move.
The market welcomed the sale as it removed uncertainty and allowed Investa to focus on domestic investments, which is seen as a positive move.
The sale reduced Investa's gearing from 29% to 24%, providing about $300 million of capacity for domestic CBD acquisitions.
The sale reduced Investa's gearing from 29% to 24%, providing them with about $300 million of capacity for domestic CBD acquisitions.
Investa plans to redeploy its gearing capacity into domestic acquisitions, aiming to acquire $400 million worth of Australian assets to offset earnings dilution.
Analysts noted that the sale was done at a 24% discount to the DOF net asset value, which was below their expectations by about 10%, but they acknowledged that the sale occurred earlier than anticipated.
UBS analysts noted that the sale price was below their expectations by about 10%, but they acknowledged that the sale occurred earlier than anticipated.
Following the sale, Investa plans to reinvest in domestic acquisitions, particularly in Australian assets, to offset any earnings dilution.
JP Morgan analysts consider the sale a major positive for the long-term performance of Investa Office Fund, as it removes a deterrent for investors and strengthens the fund's focus on core markets.
Analysts from JP Morgan consider the sale a major positive for the long-term performance of Investa Office Fund, as it removes a deterrent for investors and strengthens their focus on core markets.
Investa Office Fund focuses on managing assets in core CBD markets in Australia and select offshore markets in Europe, with a total of $2.5 billion in assets under management.
Investa Office Fund's target gearing range is between 25% and 35%, and the sale has brought their gearing below this range to 24%.
Call 1300 880 160
Start a chat
Schedule a call
