Australian-listed Astro Japan Property (AJA) Group has rebuffed an offer from New York-based Lone Star Funds to take over Japanese real estate assets valued at ¥84.5bn (€702m).
In a statement to the Australian stock exchange, Astro said: “The board did not consider that the initial proposal would deliver acceptable value for AJA security-holders, and accordingly, determined not to grant due diligence access to Lone Star Funds.”
Lone Star made a revised offer this week, extending an all-cash offer for all of Astro’s portfolio of diversified real estate assets in Japan at Astro’s 31 December 2016 book value.
The US private equity group said it was ready to commence due diligence immediately if the company agreed to its conditions.
The conditions include an agreement between Astro and the trust’s manager, Spring Investment, to terminate Spring’s external management agreement.
In response, the board said that, taking into consideration all of Lone Star’s conditions, the offer to purchase its property interest at book value was “unremarkable”.
it cited the trust’s performance, the strength of the Japanese property market and the scarcity of large-scale and diversified property investment opportunities in Japan.
Astro said the board and its asset manager Spring Investment regularly assess the trust’s portfolio and value initiatives.
“From time to time this assessment involves discussions with parties interested in acquiring the portfolio, or part of the portfolio, to determine if such a transaction would deliver a superior value proposition for AJA investors,” the statement said.
Market sources believe the biggest hurdle to a successful bid for Lone Star will be its condition that AJA removes Spring Investment as the trust’s asset manager.