The Chinese sovereign wealth fund China Investment Corporation (CIC) is reportedly part of a consortium plotting a counter-offer to take over the $2.5 billion Investa Office Fund (IOF), the last piece remaining to be exited in the long-running sale of the Investa platform.
According to multiple reports in the Australian press, CIC together with the listed Australian developer Mirvac and the global alternatives asset manager The Blackstone Group is said to be jointly bidding for the listed vehicle that owns 22 properties across the country. Blackstone declined to comment on the rumored deal when approached by PERE.
The consortium has emerged as a formidable competitor to Dexus Property Group that already has an agreed takeover deal with IOF. In late December last year, and after two weeks of due diligence, Investa Listed Funds Management, the entity responsible for the IOF, and Dexus signed a binding implementation agreement under which the two real estate investment trusts could be merged. The merger however is subject to approval by the unitholders of IOF, who are set to vote on the proposed deal on April 8.
Earlier this week, an independent board committee of the IOF released an explanatory memorandum on the Dexus takeover on the Australian stock exchange, which “unanimously recommended that all the unitholders vote in favor of the proposal in the absence of a superior proposal”.
In an office statement released on its website soon after the memorandum announcement, Darren Steinberg, chief executive officer of Dexus, said the transaction would be financially and strategically compelling for both groups.
“In addition to ownership of a quality Australian property portfolio, IOF Unitholders will benefit from our established third party funds management and trading businesses. The merger also enables IOF to achieve an internalized management structure, benefiting from an experienced and stable team with a proven track record and established, efficient systems and processes,” he said.
The sale of the Investa platform by Morgan Stanley Real Estate Investing has been ongoing over the past year. The major part of the platform – the prime office portfolio called the Investa Property Trust – was acquired by CIC for A$2.45 billion in July last year, that went on to appoint Mirvac as the asset manager for the portfolio in December. Investa Land was acquired by Proprium Capital Partners reportedly for $340 million.
However, Morgan Stanley still maintained the management rights of the Investa Office management platform until it sold them to the Investa Commercial Property Fund in February this year. The sale price was undisclosed but the deal, which transfers the ownership of management rights of circa $8.5 billion of assets across a portfolio of 39 prime grade office buildings in Australia’s major office markets, is valued above $90 million or about 1 percent of funds under management.
After the sale of the management rights Morgan Stanley now only has a stake in the IOF left after a 14-month sales process.