SYDNEY: US private equity giant Blackstone Group is seeking to deepen its exposure to Australian commercial property with a A$3.08 billion ($2.3 billion) bid for Sydney-focused company Investa Office Fund (IOF).
IOF’s directors said in a statement on Monday they would unanimously recommend the unsolicited and non-binding offer, which comes two years after shareholders rejected a A$2.5 billion bid from Australian firm DEXUS.
Blackstone’s move is a bet on the future of commercial property across Australia’s east coast, where analysts expect strong demand to support yields even if interest rates rise from their current historic lows.
“They have seen an opportunity to get a decent slab of commercial assets, primarily in the Sydney market, which has been the best-performing market for sometime,” said Winston Sammut, managing director of Folkestone Maxim Asset Management, which invests in real estate but does not own shares in IOF.
“But they are paying a big price in an environment where interest rates are likely go up.”
The offer represents a 13.2 per cent premium to IOF’s ex-distribution closing price of A$4.55 per unit on Friday, equating to A$5.15 per unit.
IOF shares surged more than 10 per cent after the announcement, and by 0430 GMT were trading at A$5.11, their highest level in almost a decade.
Last week, Blackstone struck a $439.4 million deal to buy an office portfolio in New Zealand, which was co-held by Goodman Property Trust and Singaporean investor GIC. — Reuters
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