The board of the Investa Office Fund (IOF) has defended its decision to disregard a takeover offer by Cromwell Property Group.

Uncertainty continues to surround IOF after Morgan Stanley Real Estate Investing (MSREI) finally sold its 8.94% stake in the Australian-listed vehicle.

On Tuesday, Investa Commercial Office Fund (ICPF), which manages IOF, announced it had bought MSREI’s stake for AUD232m (€162m), seemingly ending a full takeover attempt by Cromwell.

Cromwell responded to the news in a statement to the Australian stock exchange, describing the deal as a “disappointing outcome” for unitholders. Cromwell had been told that day that the IOF board did not intend to consider its takeover offer.

Cromwell revealed it had offered to buy the fund, offering AUD4.45 per security – higher than the AUD4.23 per security paid by ICPF for the MSREI stake.

IOF responded to Cromwell’s comments today by describing the offer as lacking “satisfactory evidence of sufficient equity funding” and said it was “not compelling or attractive”.

In a statement to the stock exchange, it said: “Cromwell’s highly conditional, non-binding and indicative letter stated that the equity required to complete its transaction was proposed to be sourced from unidentified third-party investors.”

IOF said the offer was to be partly underwritten by one of Cromwell’s major shareholders, Redefine Properties.

The board of the fund appears to have balked at Redefine’s AUD1.6-1.8bn equity commitment being “subject to finalisation of terms, completion of satisfactory due diligence and obtaining final internal and any other approvals necessary”.

Some industry sources have cast the purchase of MSREI’s stake as part of a defensive move by ICPF to protect its position as IOF’s manager.

The ownership of IOF has been subject to uncertainty in recent months. In April, Cromwell blocked a takeover of IOF by DEXUS Property Group by buying a 9.85% stake in the target company.

Sources close to Cromwell told IPE Real Estate that it is possible that Cromwell, as a substantial investor, could force the IOF board to hold an extraordinary meeting for shareholders to consider its offer.

“I don’t think [ICPF’s] 8.94% is a blocking stake, so Cromwell has time,” the source said.

“It remains interested in proceeding [with a takeover bid] at this price, on the basis offered.”

Cromwell CEO Paul Weightman was not available for comment. But, in an interview with IPE Real Estate earlier this year, he gave the impression that Cromwell would be patient in moving for IOF, seeing it as a perfect fit for its ambitions to develop its Australian funds management platform.

ICPF, which manages a separate AUD4.2bn prime office portfolio, said it had decided to acquire the MSREI stake to “create greater alignment between Investa, as manager of IOF, and IOF unit holders”.

The acquisition, due to settle on December 16, also enables ICPF to invest indirectly in IOF’s high quality portfolio, which has a significant exposure to the outperforming Sydney office market, ICPF said.

ICPF acquired majority control of the Investa Office Management platform in February in a AUD90m deal, and ICPF is due to pay MSREI its next and final installment of AUD45m for the management business in mid-December.