Blackstone Group LP bade $3.14 billion ($2.38 billion) for Investa Office Fund in an effort to land one of Australia’s most pursued property companies and dozens of office buildings across the country.
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.
The acquisition would deliver Blackstone, which has $450 billion in assets under management, some 37 properties stretching from Perth on Australia’s west coast to Sydney and the eastern seaboard, according to Investa’s website.
The New York-based buyout company offered A$5.25 in cash for each share of the real estate investment trust, 13 percent more than Friday’s closing price, Investa said in a statement Monday.
Investa’s directors plan to unanimously recommend investors vote for the deal unless there’s a better offer.
Investa has attracted suitors since at least 2015 when Dexus Property Group proposed a deal valued at about A$2.5 billion, a tie-up that was subsequently rejected by unit-holders. Cromwell Property Group made separate approaches in 2016 and 2017.
According to Investa’s statement, Blackstone made an initial offer of A$5.05 per share on April 5, then sweetened the bid this month after “extensive discussions and negotiations.
”The private equity firm has already started due diligence,” Investa said.
While the retail property market is struggling, analysts forecast strong demand to underpin yields on office space in Sydney, where 21 of Investa’s 36 properties are located.
Building of new office space in Sydney has slowed in recent years as developers turned to constructing high-rise apartment blocks amid record house prices.
Less than two weeks ago, Blackstone struck an NZ$635 million ($439.4 million) deal to buy an office portfolio in Auckland, New Zealand, which was co-held by Goodman Property Trust and Singaporean investor GIC.
It was forced to call off the sale of its A$3.5 billion Australian shopping mall portfolio last year due to a lack of interest, amid the retail sector’s shift away from bricks-and-mortar stores to online shopping.
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