Cromwell Property Group has ruled out a “friendly takeover” of the Investa Office Fund (IOF) after selling its stake in the listed vehicle.
The Australian real estate company bought 9.83% of IOF last year to block a takeover bid from rival Dexus.
Cromwell’s CEO, Paul Weightman, said: “We would have liked to have been able to complete a deal, but as I have said previously, it became obvious to us that a friendly transaction was unlikely to proceed, at any price.”
The stake was sold to the Investa Commercial Office Fund (ICPF), a wholesale real estate fund, for about AUD286m (€191m).
In a statement to the Australian stock exchange, Cromwell said it would sell its 61.4m securities at AUD4.65 per security, representing a premium to IOF’s closing price on October 3 and an annualised equity return of 18%.
“Upon careful consideration of all our options, we therefore decided that the best way forward for Cromwell securityholders is to realise the value in our investment,” Weightman said.
“We will continue to focus on delivering value to our securityholders through the different strategic initiatives we are currently undertaking.”
Weightman said the investment in IOF had been profitable for Cromwell. The proceeds will be used in part to reduce gearing.
The sale of the IOF stake is another setback for Cromwell, which last week pulled its planned flotation in Singapore of its European platform.
ICPF was already the single largest shareholder in IOF through a series of share acquisitions in recent weeks. ICPF owns the management platform which also manages IOF with which it jointly owns several premium office towers.
In a note to clients on today’s sale, Macquarie Research said ICPF’s 19.95% equity stake in IOF, is just below the 20% threshold required to launch take over.
It also noted that, with ICPF holding such a stake in the listed REIT, the risk of an opportunistic takeover of IOF “has reduced materially”.