Bid to share the Australand spoils

Fund managers expect a full takeover bid to be launched in weeks, with Stockland tipped to pair up with another group willing to take on the office buildings that it is not expected to hold.

Australand’s key attraction lies in masterplanned communities, a business which fits well with Stockland chief executive Mark Steinert’s plans to build out more of its land bank. The industrial business is also being sought for its capacity to develop new product at a time when values in the sector are rising strongly.

Speculation is also mounting that Stockland might look to offload the office portfolio to GPT, which recently set up a suburban office fund. Investa, which has a long relationship with Stockland, and acquisitive property fund manager Charter Hall are also likely to contest buildings in any sale portfolio.

But a roadblock to such a deal could be the perception that Australand’s office portfolio, which is made up of mainly smaller buildings in suburban locales, is of lower quality than other assets on the market.

Selling office towers is not the only path Stockland could take. The group might look to spin off its residential assets into a new fund along with some Australand projects. This kind of development fund - not seen since before the GFC - could be backed by the likes of institutional heavyweight AustralianSuper.

For many in the market, however, the key focus is the price that Stockland could end up paying to get control of its target.

One fund manager told The Australian that Stockland should not do the deal “at any price”.

Meanwhile, another senior fund manager said Stockland was unlikely to pay more than $4.40 a share for Australand, adding that they believed Australand’s closing price yesterday of $4.25 was already inflated.

Australand’s share price stood at $3.89 ahead of Stockland emerging as a major shareholder.