Deals: Property, SYB

By Glenn Dyer | More Articles by Glenn Dyer

Forget the big boy private equity deals and refocus on the good, old fashioned value hunting and opportunism now showing up in the property sector.

Ron Brierley's GPG is trying to get on the board of home builder and developer, AV Jennings, and has requisitioned an EGM to try and get two directors on board (and of course there's also GPG's stake in CSR, which is a property/building play as much as sugar and aluminium).

And the aggressive Stockland is looking to grow, as evidenced by its little noticed dabble at Investa before Morgan Stanley grabbed it with an agreed knockout bid price.

Housing and a lot of non-residential building activity has been weak for the past two to three years, but activity among the big listed property trusts has been buoyant, up to around six months ago when activity levels started slowing.

Many of the bigger trusts have grown by swallowing their trustees and becoming stapled securities, done asset swaps here in Australia and plunged offshore into the world, with the US and Europe the major targets.

Indeed, Australian trusts have become the biggest foreign property investors in US retail assets in the past year or so, on top of the existing position carved out by Westfield.

Valad recently moved into Europe with a $2 billion deal.

Earlier activity had seen the likes of GPT divorce Lend Lease, its long time parent, and strike out on its own with opportunistic investment bank, Babcock and Brown, along for the ride as a special new friend in a residential property play in Europe. That relationship is now ending as GPT looks to life on its own.

Industry leader, Westfield, is in the process of completing a huge $3 billion capital raising to finance the new five years of deals and developments.

The lacklustre Investa group is about to fall into the hands of US investment bank, Morgan Stanley for $4.5 billion and the $4.2 billion swoop by the Canadian investor, Brookfield to buy the Roberts family's 26 per cent in Multiplex and bid for the whole company.

Thursday and Friday saw a swirl of action in the ING Industrial Fund. First the aggressive Goodman International snapped up a 9.4 per cent investor in ING Industrial Fund (IIF) with a stake worth $261 million and described the move as strategic and not a takeover in the making.

The units were bought late Thursday for $2.60 each. On Friday, IIF closed at $2.66 up 26c as the fund manager, ING Real Estate, waded into the market to boost its holding to 19.9 per cent.

ING reportedly paid a total of $72 million, and almost 82.2 million shares were traded in IFF on the day.

That should be enough to thwart Goodman which, if it wants to do a deal, will have to approach ING on a friendly basis.

Goodman is much bigger with around $32 billion in assets and funds under management in Australia, New Zealand, the UK, Hong Kong and China, Singapore and Europe. It is partnered internationally by Macquarie which bought the stake late last Thursday.

ING Industrial has $5.4 billion in assets here and in Europe and Canada.

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Meanwhile, investors should keep an eye on Stockland after it revealed in its 2007 earnings result announcement in June that it had a foot on a stake in Investa.

It said the result for 2007 was boosted by "a further 1% DPS increase from the realised portion (approximately $6m) of a total surplus of approximately $50m arising from the acquisition of an economic exposure to the securities of Investa Property Group (IPG).

"In relation to above, Stockland acquired the economic exposure to the securities of IPG over an extended period at a volume weighted average price ("VWAP") of $2.26 per security.

"Stockland had previously decided not to increase its exposure further due to the substantial increase in IPG's share price over the last few months, but retained the economic exposure since it represented good value at the acquisition cost.

"The recently announced bid for the securities in IPG by Morgan Stanley Real Estate has provided the opportunity to realise a gain on the economic exposure of approximately $50m.

"This realisation will occur progressively over the next few months, and further details will be announced at Stockland's results presentation in August 2007."

Stockland didn't hold any actual shares, just a financial derivative that gave it an "economic exposure" to Investa. It held that interest in around 16.23 million units in IPG.

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And GPG has requested AV Jennings to call a general meeting of shareholders "to consider resolutions to appoint Graeme James Cureton and Jason Ters as directors of AVJ."

Both are senior executives of GPG, which holds an 11.48 per cent stake in AVJ.

AVJ said in a statement to the ASX on Friday that it "must call a meeting within 21 days after the date the request was given to AVJ. The meeting has to be held not later than 2 months after the request was given. A Notice of Meeting will be forwarded to shareholders in due course."

AV Jennings is controlled by Singapore interests.

GPG also has just over 6 per cent of CSR which is a break up that no one quite knows how to do, given the defences the company has in its asbestos liabilities, the sugar business, the stake in Tomago aluminium smelter with Alcan and the about to be acquired Pilkington Glass, where Nippon Glass controls the technology. CSR still has extensive property holdings, which could be GPG's real interest (as well as merging their respective sugar interests in Queensland).

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And, away from property, Primary Healthcare has had another stab at Symbion, the second this year.

Primary says it has acquired 9.4 per cent of SYB, boosting the holding from around fiv

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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