A Charter Hall managed wholesale partnership comprised of Dutch pension fund PGGM and Charter Hall has presented a take over offer for the listed property group, Irongate Group for $1.28bn.
Irongate Group (IAP), formerly known as Investec Property Group, manage approximately 36 properties valued at approximately A$1,590 million, predominantly via investment mandates with third parties, and via the ITAP Fund. The portfolio is geographically diversified with properties located in key markets across Australia and New Zealand. The majority of the Group’s exposure is to New South Wales, Victoria and Queensland, which represent 65% of the portfolio. Seventy per cent (70%) of the portfolio is in the Office sector and thirty per cent (30%) in Industrial sector with a combined WALE of 5.2 years.
The Charter Hall partnership proposes to acquire all of the securities in IAP by way of a scheme of arrangement for $1.90 cash per IAP security.
Irongate was already the subject of a takeover proposal from 360 Capital Group at an offer price of $1.72 cash per IAP security. 360 Capital Group had acquired a 19.1% stake in Irongate however their proposal was conditional on ESR agreeing to take some of the assets in the deal. Charter Hall has now entered into a binding memorandum of understanding with 360 Capital which would see 360 Capital acquiring 4 assets within IAP’s portfolio and the funds management business (including the co-investment stake in the ITAP Fund) for $363m, with Charter Hall acquiring the remainder.
The MOU also contains a call option over 360 Capital’s stake, and standstill and exclusivity provisions in favour of the Partnership which prevent 360 Capital from participating in or voting in favour of a Competing Proposal and from selling down their stake during the exclusivity period.
The Charter Hall proposal is therefore not conditional upon 360 Capital completing the acquisitions meaning that the Partnership will retain responsibility for funding the proposal.
The Offer Price represents a:
- 26.7% premium to IAP’s closing price of $1.50 per security on 15 October 2021, being the business day prior to the announcement of 360 Capital’s Initial Indicative Proposal;
- 21.0% premium to IAP’s last closing price of $1.57 per security on 28 January 2022;
- 23.4% premium to IAP’s pro forma NTA per security of $1.54 as disclosed in IAP’s ASX announcement on 9 December 2021 in relation to its $50 million equity raising; and
- 10.5% premium to 360 Capital’s further improved indicative proposal of $1.72 per security as announced on 15 December 2021.
IAP securityholders will also be able to retain a distribution for the period ending 31 March 2022 of up to 4.67 cents per security, representing the top end of the guidance given to the market on 9 December 2021. The Offer Price will be reduced by any distribution announced or paid in respect of IAP subsequent to the date of this Proposal, excluding the ordinary distribution for the period ending 31 March 2022 of up to 4.67 cents per security.
The IAP Board is considering the Indicative Proposal with the assistance of its advisers. IAP securityholders do not need to take any action in relation to the Indicative Proposal and are advised to exercise caution when dealing in their IAP stapled securities.
Charter Hall and PGGM formed an Industrial & Logistics Partnership in 2019 which has since secured investments in 10 properties with a value of $0.5bn.
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