Rumours are circling the market that GPT Group is on the radar of someone — and the big question is who?
It may be drawing a long bow to suggest Dexus Property Group could be interested, given stamp duty obligations and capital gains tax are thought to be a deterrent.
Sources close to the company have denied it is of interest, so other possibilities could be Stockland, Mirvac or offshore groups.
Still, while someone may be sounding out the country’s oldest property trust, it doesn’t necessarily mean a deal will proceed.
GPT posted a strong annual earnings this week, where net profit increased 13 per cent to $643 million.
The greatest defence for GPT and its peers in the sector is that it is expensive.
The real estate investment trusts on average are trading at 16.6 times earnings on an average weighted basis, with GPT trading at 16.8 times.
But the recently announced $11 billion shopping centre merger between Novion and Federation Centres also proves there’s room for consolidation in the sector via scrip deals.
One thing is for sure and that is the latest spate of merger and acquisition activity is certainly on the minds of many real estate boardroom directors, and some in the space are putting increasing thought into hiring defence advisers to protect themselves from what is becoming a very imminent and very real threat.
Meanwhile, information memorandums are due out this week for the sale of Investa’s $9bn real estate business.
It is interesting to note the latest talk about Bank of America Merrill Lynch.
The investment bank is apparently working for one of Japan’s major life insurance powerhouses in the upcoming contest, which could include a party such as Nippon Life, Dai-ichi or Mitsui.
Its interest comes as financial heavyweights in the low-growth economy are searching globally for opportunities.
Whoever BAML is engaged with, the likelihood is that its interest will be only in the $3.5bn actual portfolio of office properties, rather than the Morgan Stanley Real Estate management platform.
As part of the sales process, run by Morgan Stanley and UBS, suitors can bid for the real estate portfolio in isolation.