Centuria share raid heralds GPT Metro counter-offer

20 May 2016

Publication: The Australian (print)

Date: 20 May 2016

Author: Gretchen Friemann & Bridget Carter

TheAustralian

Property funds manager Centuria fired the opening salvo in a takeover battle for GPT Metro Office Fund yesterday, raiding the listed landlord’s register ahead of the launch of a cash and scrip bid that will trounce rival GrowthPoint’s $309.8m offer.

Centuria’s ambush of the GPT managed trust, first reported by The Australian’s BusinessNow blog, underscores the intensifying competition for assets in the sector and bears similarities to the heated contest for Investa Office Fund.

The share raid was orchestrated by Moelis in a $36m trade priced at $2.40 — a 3.5 per cent premium to the last close.

The property group now holds an 11.6 per cent stake in its quarry, delivering it an advantage over competing bidder Growthpoint, which has yet to buy any units in the landlord.

It is understood Centuria Capital, a listed $1.8 billion real estate funds manager, will emerge as the holder of stock.

The acquisitive fund manager runs the Centuria Metropolitan REIT, which is listed on the ASX and has a market capitalisation of $259m, and while this vehicle is expected to ultimately hold the assets, the bid will be partially funded by the group’s network of unlisted investors.

It is not clear when Centuria intends to submit an offer, but an announcement will be made today confirming its presence on the GPT-managed vehicle’s register.

However, sources close to the process claimed the rival bid would offer investors a higher cash component as well as an improved valuation.

Melbourne-based Growthpoint is currently conducting due diligence on the portfolio, which has six assets in suburban locations in Melbourne, Sydney and Brisbane, after lobbing a sweetened offer earlier this month.

But the GPT-run landlord’s directors are compelled to consider a superior bid, raising the likelihood that both Growthpoint and Centuria will gain access to the books.

The eruption of a takeover battle for the trust is likely to be welcomed by GPT, which spun out the fund in 2014 but has been unable to achieve any growth in the portfolio.

Centuria Metropolitan REIT, which spans the office and industrial property sectors, has also struggled to expand amid rising competition and asset valuations.

The landlord listed in November 2014 and is headed by ex-Mirvac boss Nicholas Collishaw.

The scrap for listed landlords is becoming a familiar narrative in the sector, with buyout bids facing a late challenge from an ambush on the target’s register.

While investors in the GPT-managed fund will welcome a higher offer, another fierce takeover battle in the industry delivers more fees to bankers, with UBS acting for the independent directors. Fort Street has landed in the parent GPT’s corner, while Growthpoint has called on Goldman Sachs.

Moelis is advising Centuria