Blackstone makes $3.1b tilt for Investa

Blackstone makes $3.1b tilt for Investa

1 June 2018

Deep-pocketed US fund manager Blackstone has given an emphatic vote of confidence in Australian commercial real estate with a $3.1 billion all-cash bid for the prize Investa Office Fund (IOF), which controls some of the country’s top towers, reports The Australian.

Blackstone aims to position itself at the premium end of Australia’s office market to round out its $10 billion of local property holdings, which include some of the country’s best-known shopping centres, office blocks, and logistics parks.

The hefty 18.3 per cent premium to the listed fund’s trading performance over the past month has prompted suggestions more trusts could fall to private equity or global fund raiders as international capital targets undervalued property companies.

IOF shares jumped by up to 12 per cent to a record high of $5.18 following confirmation of the offer and they closed at $5.15 in line with the bid price, which Investa’s independent directors say they plan to recommend to shareholders.

Blackstone’s offer is the third takeover the listed office landlord has received in as many years and it looks the most likely to succeed so far after winning the backing of Investa’s board, says the AFR.

Two days after Blackstone revealed its offer, however, Australian bank Macquarie Capital flagged its interest as a potential partner for the Investa office empire, adds The Australian.

The play could affect Blackstone’s takeover play for Investa, but property executives suggest both deals could be done, so long as the interests of the unlisted Investa Commercial Property Fund (ICPF) were satisfied.

Direct property experts said the takeover could trigger billions of dollars worth of building sales.

Blackstone is likely to dump non-core assets in Perth and potentially Brisbane.

In Sydney and Melbourne, however, a host of valuable pre-emptive rights on IOF towers may be triggered.

Blackstone has already flagged it would keep Investa running the $4 billion worth of IOF towers. And Investa won’t charge the US house the facilitation fees that are customary in more hostile situations.

A Blackstone-Investa link would not be the first tie-up between a local property player and a global powerhouse.

Some industry sources believe Blackstone—the largest real estate manager in the world—has the largest pool of undrawn equity for a real estate bidder in the world, says the AFR.

That means the group’s wallet is bursting at the seams and its power in the marketplace unrivalled—even among Chinese giants whose thirst for debt-funded deals is not uncommon.

The Australian says Blackstone is close to raising more than $US9 billion ($12bn) to invest in property across the Asia-Pacific region.

Blackstone president Jon Gray said the region would be an increasing focus for the firm’s growth.

“I think that in Asia, given its growth, which is significantly higher than Europe or the US, we’d like more exposure, and our investors would like more exposure there,” he told analysts during the company’s first-quarter results announcement last month.

Blackstone has steadily increased its investments in the Asia-Pacific and is now among the most active real estate buyers across the region.

If Blackstone successfully links with Investa, it could create a competitor to existing office heavyweights, including Dexus, Charter Hall and AMP Capital.