Real estate investment trusts tipped for renewed activity
The GPT Group's counter-offer for the Commonwealth Property Office Fund has ignited talk of another round of mergers and acquisition among real estate investment trusts, analysts said.
The targets include the Investa Office Fund and Australand, and possibly FKP Property. Investa and Australand have large shareholders with blocking stakes that could be used as leverage for a takeover.
Australand is significantly owned by CapitaLand, which looked at selling its stake in January this year, but after an exhaustive review of possible offers and sales, decided to remain on the register.
However, analysts have said the group could look to sell or even plan an internalisation.
GPT made an unsuccessful tilt at Australand last December, but did not want to buy the residential assets, which is now the best performer for Australand, and consequently dropped the indicative offer.
Investa has Morgan Stanley on its register, which could also look to sell or alternatively make its own offer. FKP is less likely now Stockland has sold out of its 15 per cent interest.
Analysts at Moelis & Company said merger and acquisition activity within the real estate sector has been subdued over the past three to four years but they believe it was likely to rebound over the next two to three.
"Management teams of most publicly traded real estate companies spent 2008 to 2010 fighting for survival and 2010 to 2012 stabilising their businesses," they said. "As capital markets remain accommodating for M&A activity, many companies are once again in a position to make meaningful acquisitions. In addition to the public players, some of the largest real estate private equity groups have recently raised large property funds."