Charter Hall & Abacus raid AOF Trust
Abacus and Charter Hall announced this week that they have collectively acquired an interest in the Australian Unity Office fund ("AOF") and launched a proposal to acquire the balance of the units. The pair have paid $95.6m or $2.95 per unit for the 19.9% stake and offered the same price fro the remaining securities.
The offer is a 6.1% premium to AOF’s closing price of $2.78 on 3 June 2019 and a 10.5% premium to AOF’s last reported NTA per unit of $2.67 as at 31 December 2018.
AOF portfolio consists of 9 office properties located in 5 Australian capital cities that are consistent with Abacus’ and Charter Hall’s investment objectives.
AOF had previously been pursued by US group Starwood, who in November 2018 offered at a purchase price of $2.87 cash per AOF unit. That deal was rejected by the Board of AOF.
Australian Unity's half yearly results from December 2018, showed an 8.4% increase in funds from operations due to rental increases in the portfolio and impact of owning 150 Charlotte Street, Brisbane for the full half year.
Portfolio occupancy was reported to be circa 95% at the end of 2018 despite a large number of leases being written in the period.
The trust also reported that development approval for 2 Valentine Ave, Parramatta had been received last year and the project has been short listed by one tenant for part of the proposed building and is in discussions with a number of other tenants seeking accommodation in Parramatta. To date, AOF have not reflected any uplift in their valuations as a result of that additional development capacity that the site offers, and we expect that the Board of AOF will seek a fresh valuation of the portfolio prior to responding to the Charter Hall / Abacus proposal.
Charter Hall and Abacus have entered into an agreement between themselves that allows the parties to co-operate for the purposes of pursuing a transaction involving the acquisition of all of the remaining AOF units.
Both Abacus and Charter Hall are very familiar with AOF’s property portfolio, and the sub-markets that these properties are located in and will likely break up the portfolio should they be successful in acquiring the balance of the units.