Property firm GPT Group has abandoned its bid to buy Australand Property Group’s industrial and investment property portfolio, worth an estimated $A2.8 billion.
The news came a week after GPT sold its 50% stake in the Erina Fair shopping mall on the NSW Central Coast for $397 million.
Australand had rejected GPT’s unsolicited approach in December, saying it did not provide a sufficient premium.
Neither company revealed a price at the time but there was analyst conjecture that to win the assets, GPT might have pay a premium of at least 10% to the value of the assets.
GPT said in a statement after the market closed it "has become apparent that a transaction at a price that GPT is willing to pay is not possible".
The trusts’s units closed at $3.97, up 1.7% in a rare gain on a day when the market was again hit by nervous investor selling.
If a deal had gone ahead, it would have left Australand’s $900 million residential division as a stand-alone listed entity. Fund managers have said that would give the division a higher cost of debt and it would lose its place in the real estate investment trust index.
GPT said it would continue with its "existing organic growth plans for its logistics and business parks and office portfolios and allocate capital accordingly".
Australand units ended down 0.8% at $3.53.
YTD – GPT Versus ALZ
Media reports have suggested that GPT might be looking to make a major investment in a Perth CBD office property. The sale of the Erina Fair stake was part of what GPT called a rebalancing of its investments away from retail and residential and more towards commercial and industrial.
In its statement, GPT said it "expressed an interest to work with Australand in early December 2012 to develop a proposal in the interests of both sets of security holders.
"Following the completion of detailed due diligence and discussions, it has become apparent that a transaction at a price that GPT is willing to pay is not possible. GPT has maintained a disciplined approach and has consistently advised the market that it does not need to proceed with the transaction to achieve its strategic goals."
"GPT will continue with its existing organic growth plans for its logistics & business parks and office portfolios and allocate capital accordingly."
