Giant US fund manager Starwood Capital Group has surprised investors by launching a second tilt at the listed Australian Unity Office Fund, valuing the property trust at $485 million.
In what some fund managers have described as a low-ball first offer, Starwood has pitched an all-cash, $2.98-per-AOF-unit bid. The suitor noted it had already won the support of about 16.7 per cent of the target’s register, which includes the Scanlon family-backed investment house, Hume Partners.
The AOF board said on Wednesday that no action was required by unitholders at this time.
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.
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.
In mid-2019, a consortium of Charter Hall and Abacus Property entered the fray with a joint all-cash offer of $2.95 per unit. This came after a lightning raid which snared it 19 per cent of the fund’s register.
But, again, after revising the offer to $3.04 per unit and undertaking due diligence, the joint bidders could not reach agreement with minority shareholders including Hume Partners and the deal was torpedoed.
One fund manger, who declined to be named, said he was surprised by Starwood coming back, saying it was a “low-ball offer, particularly as Starwood has been here before but didn’t succeed”.
In a statement, Starwood senior managing director and global head of real estate acquisitions Jeffrey Dishner said the offer provides unitholders with an opportunity to “obtain liquidity at a certain price”.
“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,” Mr Dishner said.
Australian Unity Office Fund shares rose 2.75 per cent to close at $2.99.