Dexus Property Group has lodged a formal offer with joint partner Canada Pension Plan Investment Board for the Commonwealth Property Office Fund (CPA), valued at about $3.8 billion.
The offer is for $1.20.5 a unit for CPA with an equity component in Dexus. A process of due diligence will now take place so CPPIB can view the CPA assets.
Dexus will emerge as the largest office landlord in the country, with a single, 26 per cent share of the Sydney high-grade office market.
It is expected that, as part of the deal, CPA will operate as an unlisted wholesale office fund with some of the assets put into the Dexus wholesale office fund.
The deal comes as the Canadian Brookfield Asset Management released its third-quarter results at the weekend.
It reported funds from operations for the third quarter of 2013 were $US1.2 billion, or $1.85 a share, an increase of $US970 million from the third quarter of 2012.
The group's Brookfield Property Partners said it was still considering a possible float of a $US4 billion Australian office portfolio, as the group believed the local market was still soft, particularly for leasing.
For the quarter the group reported a consolidated net income that doubled during the third quarter to $US1.5 billion, or $1.23 a common share.
Total net income for the nine months increased to $US3 billion.
"In our property group, we acquired a US warehouse business for $US1.1 billion and merged it with our existing operations to create one of North America's largest logistics platforms," the group said.
"We committed $US750 million to acquire a 22 per cent interest in an office and retail portfolio in Shanghai. We closed the purchase of a $US2 billion portfolio of office buildings in downtown Los Angeles and acquired two urban shopping malls and an office property in San Francisco."