Investa Office Fund

Better bid coming into picture: Investa Office Fund (ASX: IOF) is an externally managed Australian listed real estate investment trust with the market capitalization of circa $3.18 Bn as of September 04, 2018. Recently, the group received an improved Blackstone proposal scheme in which Blackstone Group agreed to raise its offer from $5.1485 per IOF unit to $5.3485 per unit, subject to certain conditions being satisfied or waived. Resultantly, the shareholders would now be entitled to receive $5.3485 per IOF unit if the scheme of arrangement gets approved by the unitholders and implemented. The shareholder meeting is set for September 6th, 2018 and the directors have consistently maintained that the unitholders should respond in affirmation to the current offering by The Blackstone Group. The Board of directors believes that the proposal is in the best interest of Investa Office.

Oxford Property Last Minute offer:Meanwhile, the stock was put on trading halt at the request of the Company until the commencement of normal trading on 6 September 2018 or when the announcement relating to the Blackstone proposal is released to the market. Subsequently, IOF revealed that Canada based company, Oxford Property has expressed their intent to take over Investa office funds and this comes just two days before the shareholders’ meeting for voting on Blackstone’s proposal. Details and takeover bid proposed by Oxford are still to come in public, but the announcement is enough to put the Investa Office board under pressure to weigh the better option between the two. It is being speculated that the offer might be superior to the Blackstone proposal.

On the financial front, the group reported statutory Net Profit of $521.6 Mn for the FY18, an increase of 10.6% over previous corresponding period (pcp). Funds from operation increased by 3.0% compared to the previous corresponding period. Return on Equity came in at 18.4% for the FY18, contributed by an unlevered Portfolio Return of 15.9% over the same period.


Fund Performance Highlights (Source: Company Reports)

On the other hand, S&P Dow Jones announced that Investa Office Fund would be removed from S&P/ASX200, effective on September 10, 2018, following the shareholders’ approval of the acquisition by The Blackstone Group L.P. (NYSE: BX). UBS Group AG and its related bodies corporate raised their voting power to 5.07%, lately. On the stock performance front, the stock has been a consistent performer with a YTD return of 16.67%. The stock gapped up following the announcement of the improved proposal by Blackstone Group on 28 August 2018. Since then the price movement has been choppy with investors awaiting the outcome of the meeting. Since the directors have already mentioned that taking the offer from Blackstone group is in their best interest citing the view of Independent expert, we believe that shareholders may consider voting in favor of the proposal to add more value to their holdings; however, offer from Oxford Properties is yet to unfold.
 

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