Investa Property Group, a real- estate firm owned by Morgan Stanley (MS), is nearing an agreement to take over management of an Australian commercial property fund from ING Groep NV (INGA), two people with knowledge of the matter said.
ING Groep proceeded with discussions with Investa because rival offers to fully acquire Sydney-traded ING Office Fund, which manages $2.7 billion of assets in Australia, the U.S. and Europe, included stock rather than cash only, said one of the people, who declined to be identified as talks are private. A deal with Investa may be announced on March 28, the people said, declining to provide details on the structure of the transaction.
The Sydney Morning Herald newspaper yesterday said that Investa was expected to announce a deal that will create a new A$9 billion ($9.2 billion) office trust. The Australian Financial Review today reported the bid was facing a challenge from another potential suitor, with investors seeking an offer close to the value of net tangible assets.
ING Groep, the biggest Dutch financial-services company, last month agreed to sell most of its real-estate investment management unit to CB Richard Ellis Group Inc. for $940 million to shrink its balance sheet. ING Management, which oversees the ING Office Fund (IOF), said in a March 24 statement to the Australian stock exchange that it’s in “well progressed” talks about the management of the fund, without naming any other party.
Shares of ING Office Fund, which has a market value of A$1.57 billion, were halted in Sydney on March 24 pending an announcement.
Investa’s offer is worth less than the fund’s net tangible assets, one of the people said today.
They declined to say whether Investa will pay cash for taking over management of ING Office Fund. Johannna Keating, a spokeswoman for ING’s real-estate unit in Sydney, and Emily Lee- Waldao, an Investa spokeswoman, didn’t immediately return calls seeking comment.
Investa, which controls real-estate assets of about A$7.4 billion according to its website, in November 2009 scrapped a A$1 billion initial public offering of an Australian office fund after investors balked at the price.