Centuria moves step closer to metro office funds merger

16 March 2017

Publication: Australian Financial Review
Sydney, 16 March 2017

Centuria moves step closer to metro office funds merger

Centuria Capital has passed a key step for a merger of its two suburban office funds into a $417 million vehicle after a unanimous shareholder vote to simplify one of the trusts.

Investors have endorsed the move to transform the $281 million Centuria Metropolitan REIT from a more complex listed stapled entity to a single listed fund.

The transformation, through a series of corporate steps, will ultimately help pave the way for a merger between that metro fund and its listed stablemate, the Centuria Urban REIT.

Peter Done, Centuria Property Funds chairman, said simplification of the metro trust would result in cost savings, make the fund more transparent, and reduce the expense of any future acquisitions.

As well, the merger between the two suburban office funds is “conditional on the simplification proposal being approved”, Mr Done told shareholders.

The joining of the two smaller trusts has been expected since last year when Centuria Capital, led by John McBain, bought out the 360 Capital Group real estate platform in a
$290 million deal.

A so-called merger of equals between Centuria’s own metro office fund and the $163 million 360 Capital fund, since renamed the Centuria Urban REIT, was then flagged as likely. Earlier this month, with earnings season over and any revaluations brought to book for the two funds, Centuria issued the scrip and cash ratio for the proposed union.

Investors will receive 0.88 shares in Centuria’s metro fund for each of their shares, along with a 23¢ cash payment.

The implied values in the proposal are based on a net tangible asset backing for the Centuria metro fund of $2.32 and of $2.27 for its newly arrived stablemate.

The merger will create a single fund with a $602 million portfolio and the potential for inclusion in the S&P/ASX300 AREIT index.