GARDA Capital Group announced this week that it had entered into a Scheme Implementation Deed with GARDA Diversified Property Fund, to internalise its current external management functions and create a new diversified, stapled property group.
GARDA Property Group. GARDA is the responsible entity of GDF and currently owns approximately 13.51% of the issued units in the Fund.
GDF through a committee of Independent Directors comprising Morgan Parker and Philip Lee, has proposed to internalise its management functions by acquiring 100% of GCM securities via a Scheme of Arrangement and Trust Scheme.
To assess and implement the proposal, GCM established a committee of Directors comprising Matthew Madsen (GARDA Executive Chairman and Managing Director) and Mark Hallett (GARDA non-executive director), both of whom are substantial securityholders of GCM.
The Committee engaged Jones Day as legal adviser and PWC as tax advisor to assist in the review of the transaction. Additionally, GCM has appointed Grant Thornton (Independent Expert), to opine on whether the Internalisation is in the best interests of GCM securityholders.
As part of the deal, GDF are offering 1.6 GDF stapled securities for each GCM security held. Should the Internalisation be implemented, GCM securityholders will own approximately 21% of GARDA Property Group.
Based on the distribution adjusted closing price of GDF units as at Thursday 19 September 2019, GDF will acquire GCM for $61.6 million, a 5.5% premium to GCM's closing market capitalization on 19 September 2019.
Some key advantages of the Internalisation include:
- Compelling profile – if the Internalisation proceeds. GARDA Property Group wilI own and manage an integrated real estate platform comprising 17 industrial and commercial properties on the Australian east coast, valued at approximately $404 million and employ a team of professionals across real estate investment, asset management development, leasing, finance and corporate services.
- Scale benefits – based on pre-Internalisation market capitalisations for GCM and GDF of approximately $58 million and $270 million respectively, GCM Securityholders would be exchanging their GCM Securities for securities in an entity of significantly greater scale and with an expected improved ability to source equity and debt capital to underpin future growth.
- Continuity of key management – existing directors and key management will continue in their current roles.
Assuming the proposal meets its various pre-conditions to approval, Unitholders will vote on the proposal in min November 2019.
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