Mirvac Group (MGR) is considering making a takeover offer for Australand Property Group (ALZ), the real estate developer that rejected a bid from GPT Group (GPT) last week, two people with knowledge of the matter said.
Mirvac, a Sydney-based property trust, is seeking advice on a potential deal from Citigroup Inc., said the people, asking not to be identified as the matter hasn’t been made public. Any deal is in the early stages and a bid isn’t imminent, the people said.
Mirvac’s potential bid, as well as GPT’s earlier offer, “augur well for REITs in 2013, and will result in other groups stepping up and having a look around,” said Winston Sammut, managing director of Sydney-based Maxim Asset Management. “Borrowing costs are down and REITs are now trading closer to net tangible assets, so funding for deals is likely to be a combination of debt and equity.”
A deal, if agreed, would be the second announced takeover of an Australian REIT in 2012, according to data compiled by Bloomberg. It follows Brookfield Asset Management Inc.’s A$410 million ($432 million) takeover of Thakral Holdings Group, announced in April and completed in October.
The Australian Financial Review today reported that Mirvac is considering a deal that would create a A$7 billion diversified property company. Australand hasn’t received a proposal from Mirvac, the Sydney-based company said in a statement to the Australian stock exchange today.
“We continually assess opportunities to increase shareholder value,” Mirvac said in an e-mailed statement. “We are also aware of our continuous disclosure obligations and there is nothing to disclose.”
Judy Hitchen, a Sydney-based spokeswoman for Citigroup, declined to comment on the bank’s involvement.
Australand last week rejected GPT’s takeover bid for its commercial and industrial property assets and development business, saying the A$140 million premium to the value of the assets offered wasn’t sufficient. GPT responded that it’s “committed to advancing” the bid, which would leave Australand with only its residential business.
Australand shares jumped 2.7 percent to A$3.46 at the close of trading in Sydney, the highest since July 2008. Mirvac shares dropped 1.7 percent to A$1.485, the most in a month, while GPT fell 0.8 percent to A$3.58 a share.
Mirvac has a market value of A$5 billion, compared to Sydney-based Australand’s A$2 billion, according to data compiled by Bloomberg.