In other business news, Macquarie Group is back in the takeover game in property.
A Macquarie-led consortium has offered more than $1 billion to buy most of Australian property owner Charter Hall Office Real Estate Investment Trust (ASX code CQO).
In an offer made last week and made public yesterday, Macquarie Capital and other global institutional investors proposed the acquisition for cash of all of Charter Hall Office REIT’s listed units, other than those held by Charter Hall Group.
The consortium of investors made an indicative proposal of $2.39 for each Charter Hall Office REIT unit, valuing the non-binding bid at $1.02 billion.
The offer is based on publicly available information and remains subject to due diligence, the consortium said in its offer.
The news saw units in the Trust jump more than 16% to $3.37, up 47c on the day. That’s still below the year’s high of $3.71.
Shares in Charter Hall (CHC) jumped 6.2% or 11c to $1.87.
The Charter Hall Group held 13.4% of Charter Hall Office REIT’s units as at June this year.
The independent directors of Charter Hall Management, the responsible entity for Charter Hall Office REIT, had not yet formed a view on the bid, they said yesterday
"The Consortium is contemplating an indicative proposal price for the Australian portfolio of $2.39 per CQO Unit reflecting the Consortium’s views on asset pricing, estimated sell side costs, anticipated capex commitments and expected tax liabilities that will be inherited.
"This amount is indicative only based on publicly available information and subject to a number of variables and due diligence.
"This equates to $3.52 per CQO Unit after adding the expected capital return from the US portfolio divestment of $1.13."
Directors said further discussions are likely to be held between the directors and Macquarie Capital before due diligence access is granted.
Charter Hall Office REIT owns 19 office properties in Australia, the most valuable being the CitiCentre and Number 1 Martin Place buildings in Sydney.
A further 14 properties in the United States are set to be sold off by the trust.
Aside from a six week due diligence period, the Macquarie offer is also subject to the sale of Charter Hall Office REIT’s US properties and arrangements being made for Charter Hall Group to remain the trust’s responsible entity.
"The Independent Directors can provide no assurance at this stage either that the Indicative Proposal will proceed or that the Consortium will be granted due diligence.
"Accordingly, CQO unitholders should take no action at this time.
"The Indicative Proposal will not have any impact on the completion of the US sale process."
Late last month Charter Hall fought off an attempt to replace its Charter Hall Office Management Limited as the responsible entity of Charter Hall Office REIT and replace it with Moss Capital Funds Management Limited.
Moss Capital Funds is associated with former Macquarie Bank property boss, Bill Moss.
And three hedge funds that own close to 20% of the trust’s shares — Orange Capital, Luxor Capital and Point Lobos Capital — failed recently in an attempt to force a strategic review and sale of the trust’s $1.9 billion Australian assets.
They would have to be considered sellers into any bid from the Macquarie consortium.
The at $2.39 a share, is about 9% lower than the net tangible asset valuation of the company. And the independent experts report commissioned as part of the recent brawling, suggested it was not a good time to be selling property assets in this country.
The trust recently rejected an offer from the trust’s manager and major shareholder Charter Hall to buy it out at a 5.5% discount to its net tangible asset backing.
And toll road operator Macquarie Atlas Roads has cut its first half loss and says it expects revenue and earnings to increase in the next 12 months.
The company has interests in six toll roads in the US, UK, Germany and France.
It was formed from the 2010 restructure of Macquarie Infrastructure Group into two separately listed toll road firms: it was the so-called ‘bad’ MIG with interests in offshore toll roads.
Macquarie Atlas Roads (MQA) yesterday reported a $106.4 million loss for the six months to June 30, which was an improvement from the previous corresponding period’s $226.1 million loss.
The result includes net losses of $17.3 million on its investments plus operating costs of $92.2 million, more than double that of the previous corresponding period.
MQA Trust CEO Mr Peter Trent said in yesterday’s statement that : “MQA’s portfolio of toll roads achieved positive revenue and earnings growth during the period, with proportionate revenue and EBITDA increasing 4.2% and 5.4% respectively.
"Traffic volumes across the portfolio were broadly in line with the prior corresponding period.
"Despite weaker economic conditions in some markets, the majority of roads in the portfolio delivered solid revenue and EBITDA growth, with MQA’s largest asset, APRR, delivering a 6.5% increase in EBITDA for the period.
“Our main focus over the coming months is the refinancing of the Eiffarie debt facility. The timetable remains unchanged, with completion of the refinancing expected by early 2012,” Mr Trent said.
Taking out the impact of accounting losses, which the company said had no impact on
