IOF - Investa Office Fund

[nulla nulla]

You have to love the hype that surrounds the share market. It is entirely driven by ardrenalin and often has little or no substance. IOF took off like a scalded cat when GPT lobbed a counter bid for CPA. The hype was that IOF would also become a takeover target and the speculators jumped in pushing the price up to $3.28. Fairly amazing when you stop to consider how tightly the shares in IOF are held by the major shareholders. The price hike was on shinny volumes but this didn't seem to bother anyone. Not surprisingly the share prices drifted down again last week testing $3.12 on Friday.



Don't be surprised if IOF tests lower next week. But watch for a bounce as it comes back to parity with the NTA (and posibly a small premium?) As always, do your own research and good luck.

 

[nulla nulla]

In favour, then out of favour. IOF continues to oscilate. The volatility providing opportunities for the brave and insane among us.

I thought $3.05 was a low risk entry point on Tuesday so I wasn't impressed when the trend continued lower to $3.02 yesterday.



The recent channel suggests IOF could find support and bounce from here, but the longer term trends of the All Ords, the property sector and IOF also show that our market could be falling with IOF capable of drifting down to $2.97 (or lower). Volumes have lifted the last few trading days. I'm not qualified to say this is a sign of desperate sellers or eager buyers. You do your own research and you takes your chances or you don't . Good luck.

 

[coolcup]

In favour, then out of favour. IOF continues to oscilate. The volatility providing opportunities for the brave and insane among us.

I thought $3.05 was a low risk entry point on Tuesday so I wasn't impressed when the trend continued lower to $3.02 yesterday.

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The recent channel suggests IOF could find support and bounce from here, but the longer term trends of the All Ords, the property sector and IOF also show that our market could be falling with IOF capable of drifting down to $2.97 (or lower). Volumes have lifted the last few trading days. I'm not qualified to say this is a sign of desperate sellers or eager buyers. You do your own research and you takes your chances or you don't . Good luck.

In addition to this commentary, the other major issue surrounding IOF is a potential takeover offer from GPT that has been mooted for some time after GPT missed out on CPA. The biggest stumbling block in a potential deal is that IOF's manager Investa is a better office manager and has a large pipeline of assets it can sell into IOF to further future growth. Investa's appetite to sell and GPT's appetite to take another bite after a series of failed M&A attempts will be key to any deal getting legs in my view.

 

[nulla nulla]

In addition to this commentary, the other major issue surrounding IOF is a potential takeover offer from GPT that has been mooted for some time after GPT missed out on CPA. The biggest stumbling block in a potential deal is that IOF's manager Investa is a better office manager and has a large pipeline of assets it can sell into IOF to further future growth. Investa's appetite to sell and GPT's appetite to take another bite after a series of failed M&A attempts will be key to any deal getting legs in my view.

I suspect that GPT's announcement of abandoning the CPA bid and recommencing the share buy back has thrown some cold water on the prospects of an IOF takeover bid by GPT. The office assets of IOF are unlikely to fall into the same calibre as those of CPA and are less attractive to GPT. In my opinion the lack of confidence in a bid from GPT is probably the main reason that IOF has been sold down to the extent it has.

The merger with the parent company was mooted in January but it seems to have gone quiet in the media. IOF is fairly tightly held by the large investors, there isn't a lot of shares in play for retail investors which is one of the reasons the share price can fluctuate on small volumes. In my humble opinion, at $3.00 IOF is oversold. But my opinion matters very little when the market decides to unload their holdings and invest somewhere else.

 

[coolcup]

I suspect that GPT's announcement of abandoning the CPA bid and recommencing the share buy back has thrown some cold water on the prospects of an IOF takeover bid by GPT. The office assets of IOF are unlikely to fall into the same calibre as those of CPA and are less attractive to GPT. In my opinion the lack of confidence in a bid from GPT is probably the main reason that IOF has been sold down to the extent it has.

Completely agree with this. Will be interesting to see how GPT manages to reach its $10bn FUM goal.

 

[nulla nulla]

Completely agree with this. Will be interesting to see how GPT manages to reach its $10bn FUM goal.

Don't forget that GPT did a deal with Dexus, conditional on Dexus getting 100% of CPA, for Dexus to sell GPT about $1.6 billion of CPA Office assets. That will move GPT closer to the $10b funds under management. Given the extent that GPT has available funding, it shouldn't be too hard for GPT to cherry pick as and when the A grade assets become available.

 

[nulla nulla]

Like the rest of the A-REIT Sector the IOF share price is bouncing around on the volatility of the international arena and the jawboning of the Aussie economy by Glen Stevens.

For the insane and/or very brave there appears to be a tradable range when entries present themselves around $3.18 with an exit around $3.24.



I did say "insane and/or very brave". Unfortunately I am not very brave and the current IOF price levels are too close to their tops for me to consider a risky entry. Personally I consider it is just as likely for IOF to test the lows of $3.10 as it is for it to climb above $3.26. Additionally I think the prospects of IOF being a take-over target have been diminished by the purchase of a 19.5% stake in Australand by SGP and the carve up of CPA by Dexus and GPT. As always, do your own research and good luck.

 

[nulla nulla]

This share, in my humble opinion, is amazing. The shares are tightly held by a handful of share holders. But what shares there are available for the market to dabble with, seem to turnover with significant spreads on modest trade volumes.



Whether it can keep going or returns to support levels around $3.20 (+/- 2c) remains to be seen. As always do your own research and good luck.

 

[Toyota Lexcen]

will be interesting to see what happens with this one, If takeover does collapse you would think that IOF would loose a bit

hopefully someone lobs a better offer on the table thursday!!

 

[nulla nulla]

will be interesting to see what happens with this one, If takeover does collapse you would think that IOF would loose a bit

hopefully someone lobs a better offer on the table thursday!!

The Dexus bid of scrip and cash (when the Dexus price was high $7.00's) valued IOF at $4.11;
Cromwell snapped up their 9.8% stake this week (using scrip and cash) valuing IOF at $4.24;
Cromwell have advised the chair of the Independent Directors Committee that they look forward to the outcome of the IOF share holders meeting on Friday (without disclosing their voting intentions); and
Dexus now has to contend with the hostile Morgan Stanley shareholding, the Cromwell share holding and those apathetic share holders that won't vote.

The likelihood of Dexus completing the takeover must be diminishing. Dexus has politely pointed out that they may be entitled to a break fee if their offer doesn't get up before 31 December 2016. I suspect that the Dexus share price surged to new highs this week (after the Cromwell purchase) as the market sees the acquisition of IOF as being less likely. I also suspect that was the reason that the IOF share price fell back (after the initial surge when Cromwell announced their acquisition).

The big winner in all of this is CBRE who sold out to Cromwell at $4.24.

 

[greggles]

Investa Office Fund have announced today that they have received an unsolicited, indicative and non-binding proposal from funds managed or advised by Blackstone Singapore Pte. Ltd. in relation to a proposal to acquire IOF by way of a trust scheme.

Under the proposal IOF unitholders will be entitled to $5.25 cash per unit reduced by any distributions declared or paid by IOF after 4 May 2018 and prior to completion of the proposal. The proposal represents an offer price of approximately $5.15 per unit once IOF's expected 2H18 distribution is taken into account (based on previous distribution guidance). This distribution is expected to be paid to IOF unitholders in August 2018.

The Directors of Investa Listed Funds Management Limited intend to unanimously recommend that IOF unitholders vote in favour of the proposal, subject to an Independent Expert opinion that the proposal is in the best interests of IOF unitholders and in the absence of a superior proposal.

Looks like reasonable outcome for IOF unitholders when looking at a 10 year price chart.

 

[nulla nulla]

NTA was $4.95 last time I looked. The offer at $5.25 ($5.15 after the distribution) is only 4% more than NTA. Puts a fairly low value on the income stream etc. If I was holding I would probably take the offer and redirect my investment but I don't think it is a great outcome.

 

[System]

On December 17th, 2018, Investa Office Fund (IOF) was removed from the ASX's Official List in accordance with Listing Rule 17.11, following implementation of the scheme of arrangement between IOF and its security holders in connection with the acquisition of all the issued capital in IOF by entities affiliated with Oxford Properties Group.