Bloomberg News

GIC Affiliate, Canada Fund Up Firm Charter Hall REIT Bid

January 04, 2012

(Updates with closing share price in sixth paragraph.)

Jan. 3 (Bloomberg) -- A Government of Singapore Investment Corp. affiliate and a Canadian pension fund signed a binding agreement to pay A$1.2 billion ($1.2 billion) for most of Charter Hall Office REIT.

GIC’s Reco Ambrosia Pte and The Public Sector Pension Investment Board of Canada signed the agreement on the condition the REIT completes the sale of its U.S. properties by March, according to a statement to the Australian stock exchange. The trust’s stakeholders will receive one or more payouts from the sale of the U.S. assets, according to the statement.

The two funds made an initial conditional offer last month to pay A$2.49 a share for 85 percent of the Australian property trust not owned by its manager Charter Hall Group. The Sydney- based trust agreed in August to sell its U.S. assets for $1.71 billion to entities affiliated with Beacon Capital Partners, as it shifts its focus homeward.

The bid for its Australian assets, which values the company at A$1.2 billion, “offers the most compelling and certain value proposition currently available to eligible unitholders,” Independent Chairman Roger Davis wrote in an e-mailed release.

The REIT’s independent directors rejected two earlier bids of A$2.39 and A$2.43 a share for the Australian part of its business, saying they didn’t adequately value the company. The current offer is a 4.2 percent discount to the trust’s net tangible assets.

Payments

Charter Hall Office shares rose 0.9 percent to A$3.54 at the 4:10 p.m. close of trading in Sydney, more than A$1 above the offer price, due to the anticipated distribution from the U.S. asset sale.

Charter Hall Office stakeholders will receive A$1.83 a share in cash, and a special distribution of about 66 Australian cents -- funded with a new debt facility taken by the buyers -- paid on the implementation date, it said today. Proceeds from the U.S. sale received after the implementation date will be paid to unitholders through an escrow agent, the company said.

More than 75 percent of the REIT’s unitholders must vote in favor of the proposal for it to succeed, the company said. Shareholders are expected to vote on March 15, it said.

Singapore’s GIC manages more than $100 billion of the city- state reserves while the Canadian fund has assets exceeding $58 billion as of March 2011, according to the website.

Charter Hall Group will hold on to its share and continue to manage the trust as an unlisted entity, according to the statement.

--Editors: Linus Chua, Andreea Papuc

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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