The Australian Unity Office Fund (ASX: AOF) has received an unsolicited, indicative non- binding all cash takeover offer for all its securities at a price of $2.95 per security. The proposed offer was made by the CHAB Office Trust, a new joint venture between Abacus Property Group (ASX: ABP) and Charter Hall (ASX: CHC) which has already acquired a 19.9% stake in AOF via off market purchases at the same price.
The proposed offer follows an unsuccessful takeover offer for AOF by Starwood Capital in 2018 which was formally priced at $2.871 per security and ultimately rejected by the independent board of AOF.
The offer is subject to a number of conditions including due diligence, the unanimous approval of an independent board appointed by AOF, and FIRB approval. Whilst the offer will need to be formalised and put to a unitholder vote, a process that generally can take between 2–3 months, the proposed offer presents a superior price to the Starwood offer in the absence of a competing offer.
The proposed offer values AOF at around $480M and comes during a busy week of activity with over $1B of transactions announced including the sale of the Zenith Centre, Chatswood NSW ($438.2M), Mirvac acquiring build to rent apartments ($333.5M) and acquisitions announced by Charter Hall Long WALE REIT ($202M) and Charter Hall Education Trust ($51.3M).
In the past week, the Reserve Bank of Australia also announced that it has lowered the official cash rate by 25 basis points. This the first change in the rate since August 2016 with the cash rate now at a record low 1.25%. The move was widely expected by the market, with the rate cut undertaken to support employment growth and inflation, and expectations of a further rate cut by the end of the year. The RBA decision is expected to provide support to the property markets, with the listed A-REITs 300 index increasing 3.5% during the week compared to the All Ordinaries gain of 0.5%. Both CBA and NAB passed on the full 25bps rate cut, whilst ANZ cut its variable rate by 18bps and Westpac cut its variable rate by 20bps.