Mirvac Group has until Monday to thrash out a $400 million-plus deal for the management rights and two investment stakes in Morgan Stanley’s vast real estate empire, Investa Property Group.
The US bank’s decision to grant an extension to the exclusive due diligence period reflects persistent internal resistance within Investa to the proposed change of control.
Its multi-billion internal funds, the unlisted landlord ICPF, and its listed stablemate IOF, have both agitated for an internalisation of management in past weeks.
But the requests were abruptly rejected by Morgan Stanley. Despite these challenges Mirvac is on course to ink a deal by Monday.
Investa Office Fund, which releases its results today, still poses the greatest obstacle to any deal after its management suddenly decided to launch a strategic review on Friday. While the move has garnered support from unitholders, including the fund’s biggest stakeholder, CBRE Clarion, a global property securities investor, it threw Mirvac into a quandary.
The trust, headed by Sue Lloyd-Hurwitz, faced the problem of paying full price for a funds management platform that could fragment within months of a deal.
But Mirvac, which offered close to $200m for the management rights to the entire business, including the $2.45 billion portfolio of buildings recently acquired by China’s CIC, is expected to press ahead with the acquisition providing Morgan Stanley agrees to a clawback provision.
It’s understood the bank has agreed to these terms, enabling the trust to recoup the cost of IOF’s departure. Meanwhile, Mirvac has made greater headway in its negotiations with the more valuable unlisted landlord, ICPF.
This article first appeared in The Australian Business Review.