Starwood Capital try another $485m tilt at Australian Unity

Starwood Capital try another $485m tilt at Australian Unity

31 January 2020

US investment heavyweight, Starwood Capital has come back for another tilt at ASX-listed Australian Unity Office Fund with a $485 million takeover offer.

The all-cash offer at $2.98 per unit — which has been described as a low-ball offer — comes more than a year after Starwood’s first effort to buy out the Australian Unity managed fund. 

Starwood made its first move on the property fund in late 2018, at the time offering $2.95 per AOF unit. Following months of talks and due diligence, the bid collapsed and Starwood walked away.

The latest Starwood bid also comes just two months after a drawn-out takeover proposal by locally listed fund managers Charter Hall and Abacus which was voted down by investors in November. 

Starwood is bidding for control of a property portfolio valued at $641 million, consisting of nine office assets across five Australian capital cities, some with development opportunities.

On face value the Starwood offer is lower than the $3.04 cash offer from the Charter Hall-Abacus consortium, which totalled $495 million.

“Starwood’s offer to acquire AOF for $2.98 per unit provides unitholders with an opportunity to obtain liquidity at a certain price,” said Jeffrey Dishner, senior managing director and global head of real estate acquisitions at the Starwood Capital Group, in a statement.

“The offer price also represents a premium to the current trading levels and net tangible assets. We look forward to engaging with all stakeholders regarding the offer as we work to successfully complete the transaction.”

The fresh offer is a 6.8 per cent premium to the target fund’s net tangible assets of $2.79 per unit booked in June last year. It is also at a 4.6 per cent premium to book values after taking into account subsequent revaluations flagged in December.

A key hurdle for the Starwood offer remains Hume Partners, the Scanlon family-backed investment house which controls 14.61 per cent of the stock and is understood to be not interested by the offer price.

UBS is advising the Australian Unity-run fund, while Rothschild & Co and King & Wood Mallesons are acting for Starwood.

Starwood Global Opportunity Fund XI is a discretionary fund with a total committed capital of approximately US$7.55bn and sufficient undrawn capital to fund the offer.

The Australian Office Fund REIT owns had a property portfolio across Australia with nine offices valued at $668.4 million as of 30 June 2019.