The seemingly endless struggle to resolve the fate of one of the largest landlords in the country, the Morgan Stanley-backed Investa Property Group, looks set for another dramatic twist as Mirvac prepares to storm back in to the race for the property giant’s management platform.
Earlier this week, Mirvac executives flew to China to meet representatives of CIC, the country’s sovereign wealth fund, in an effort to win control of a portion of the Investa empire.
The Chinese heavyweight paid Morgan Stanley $2.45 billion earlier this year for the directly-owned skyscrapers within Investa.
The deal, which trounced the market’s price expectations and set a new benchmark yield in the office sector, was meant to form the first phase of the bank’s exit from the business.
Instead internecine frictions within Investa are intensifying and the $8.9bn empire continues the prospect of a bitter breakup. The problems centre on the conflicting objectives of the group’s two funds, the listed Investa Office Fund and the unlisted Investa Commercial Property Fund.
Both wanted to internalise and spearhead a move to take over the entire management platform.
Yet while IOF’s efforts on this front have proved fruitless, its stablemate has met with far greater success. Not only has it won more Investa assets from Morgan Stanley it has also persuaded the bank to accept close to $80 million less than what it might have secured for the management rights.
In September, Mirvac offered $400m odd for platform and twin stakes in IOF and ICPF.
That bid was trampled when ICPF demanded the ability to pursue an internalisation.
However, the unlisted fund, which holds stakes in some of the country’s top buildings including Deutsche Bank Place in Sydney, now faces a new challenge.
IOF has refused to sign up to the move and looks increasingly likely to pursue an internalisation. The vehicle, in which CBRE ranks as one of the biggest shareholders, is still in the midst of a strategic review.
The two funds failure to reach an agreement has strengthened the hand of CIC, since its portfolio forms the third leg of the Investa office management platform.
Earlier this week, ICPF and Investa executives also jetted out to China in the hope they could win CIC’s support for the internalisation — a move that would isolate IOF. But CIC has yet to decide and with two out of the three constituents of the platform wavering, ICPF’s deal looks shaky. The uncertainty has allowed Mirvac to muscle back in to the race and some in the sector predict the listed trust will eventually prevail.
This article first appeared in The Australian Business Review