Australand Property Group (ALZ), the Australian real estate trust controlled by Singapore’s CapitaLand Ltd. (CAPL), slid by the most in more than a year, after GPT Group withdrew a bid for its commercial property business.
Australand shares dropped as much as 5.1 percent to A$3.35 in Sydney. The stock traded down 4.1 percent at A$3.385 as of 10:48 a.m. local time, heading for the biggest drop since December 2011. GPT shares fell as much as 1.4 percent to A$3.91.
GPT, Australia’s second-biggest diversified property trust by market capitalization, yesterday said it was abandoning its pursuit of Australand’s commercial property and development businesses, because a transaction at the price it was willing to pay wasn’t possible. Australand in December rejected GPT (GPT)’s offer, which would have left the target with only the residential development business, saying it didn’t offer a “compelling” value proposition.
“We expect CapitaLand to offer part or all of its 59 percent holding in Australand in a secondary offering, which would attractively increase its liquidity,” John Kim, head of real estate research at CLSA Asia-Pacific Markets, said in an e-mailed note today.
CapitaLand said in January it would consider exiting its investment in the Sydney-based company. Yesterday’s announcement isn’t expected to have any “material impact” on CapitaLand’s net tangible assets or earnings per share, the company said in a separate statement through the Singapore Stock Exchange.
Australand’s office and industrial investment properties were valued at A$2.3 billion (A$2.2 billion) as of Dec. 31, according to the company. The company’s planned commercial development projects, included in GPT’s bid, had an end value of A$2.1 billion, and its planned residential developments, which weren’t included in GPT’s bid, will be worth a total A$8 billion on completion.
“Australand confirms that it was unable to develop a proposal with GPT that was compelling for Australand security-holders,” the property trust said in response to GPT’s statement. “Australand advises that, while it is not in receipt of any other formal proposals, the process has not reached a conclusion and it will update the market once the process has been completed.”
GPT “doesn’t need to proceed with the transaction to achieve its strategic goals,” GPT said yesterday.
Australand shares are unchanged this year, compared with a 7.6 percent increase in GPT shares and a 6.7 percent gain the benchmark S&P/ASX 200 index.
To contact the reporter on this story: Nichola Saminather in Sydney at nsaminather1@bloomberg.net
To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net
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