One of the larger institutional investors in the $3 billion Investa Office Fund, BT Investment Management’s Peter Davidson, has warned suitor Cromwell Property Group to speed up its takeover intentions or move on.
“Cromwell’s credibility is at stake,” Mr Davidson said on the sidelines of Macquarie Connections equity conference in Sydney this week, “We have been waiting a long time for Cromwell to announce an unconditional cash bid which is yet to eventuate. As I used to say to my young daughter, ‘it’s time to pee or get off the pot!’.”
IOF, which manages a $3.6 billion portfolio of office towers around Australia and is advised by Macquarie, rejected a $2.7 billion conditional takeover and privatisation bid by Cromwell in November last year saying Cromwell’s proposal “lacked suitable funding”.
Then in February IOF’s independent directors opened their door again to the suiter, saying it was “willing to provide Cromwell with confidential information in order to facilitate Cromwell being in a position to provide IOF unitholders with an all-cash proposal which is compelling and attractive.”
Cromwell chief executive Paul Weightman said he was seeking the right information about Investa in order to proceed.
“The reason why we are in due diligence is because we want the right information to be able to make an unconditional binding offer,” he said.
Investa is soon to announce its latest revaluations of its office towers which could change the price Cromwell is willing to provide unconditionally.
At the same time there is also a move that could see IOF pay at least $45 million for a stake in the management platform of Investa Commercial Property Fund. This would see IOF internalised.
Mr Davidson said he supported such a move.
“We would support the internalisation proposal because it creates better alignment and some earnings accretion for IOF,” he said.
“And we believe the internalisation process does not preclude a subsequent takeover offer. In fact, many direct investors would welcome the opportunity to buy properties with an internalised management team attached.”
Cromwell’s Paul Weightman disagrees.
“On the information we have seen so far it makes no sense. IOF pay $45 million for something they would lose as soon as it’s taken over.”
