It's crunch time for Investa Property Group. The threat of a sale has hung, like a sword of Damocles, over the Morgan Stanley-backed $9bn real estate empire for years.
By next Tuesday its fate may be sealed. According to sources, Investa’s board will meet to finalise how and when to sell its $3.5bn property portfolio, which includes some of the country’s most iconic buildings, such as Deutsche Bank Place. A decision to internalise its listed vehicle, Investa Office Fund, may follow although this plan could be derailed if a suitor bids for the entire platform.
Prospective buyers are already preparing to pounce. Private equity giant Blackstone is the latest to veer into view with sources claiming the firm is keen to acquire all of Investa, including IOF and its wholesale vehicle, ICPF.
As The Australian revealed last week, LaSalle Investment Management, one of the world’s largest property investors, is hoping to elbow its way to the front of the queue by luring the Middle Eastern sovereign wealth fund, ADIA, into a bidding consortium.
It has appointed Goldman Sachs as its adviser and like Blackstone is pitching to acquire the entire business. Yet Investa has already arranged its defences in expectation of a full takeover offer.
Morgan Stanley and UBS are advising the group, while Macquarie and Fort Street are tending to IOF.
Investa’s board meeting, which will see some of Morgan Stanley’s heavyweight’s roll into Sydney, is scheduled two days before IOF is due to release its results on February 19. While there is a growing expectation Morgan Stanley and Investa’s directors will sign off on an auction of the Investa Property Group assets, the decision is likely to leave IOF vulnerable to a takeover assault.
Both the listed office landlord and its unlisted stablemate hold extensive pre-emptive rights over Investa’s assets. In a further complication, IOF has the right to buy a stake in the Investa platform once it hits $3.5bn of local assets. The conflicting interests risk pitting the two funds’ independent directors against the parent, although such a showdown may be avoided if an offer for the entire business proves compelling.
This article first appeared in The Australian Business Review.