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Macquarie makes a $1.7bln bid for Charter Hall Office

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Stock in Charter Hall Office Real Estate Investment Trust (REIT) has soared after a Macquarie Group-led consortium lodged a $1.74 billion offer for the trust.

The trust owns 19 office properties in Australia valued at $1.9 billion and is currently selling off all its properties in the United States.

Last week the trust reported a return to profitability in the year to June, booking a full year net profit of $69.4 million.

News on Monday of the unsolicited offer to go private sent its listed units to a four-week high of $3.40, before they closed at $3.37, up 47 cents, or 16.2 per cent.

Macquarie Capital is leading a group of global institutional investors that have offered to pay cash for all of Charter Hall Office REIT’s listed units, other than the 13.4 per cent held by the trust’s manager Charter Hall Group.

The consortium of investors made an indicative proposal of $2.39 for each Charter Hall Office REIT unit, plus a $1.13 special distribution stemming from the expected net proceeds of the US asset sale.

At $3.52 per unit, the offer is valued at $1.74 billion.

Charter Hall Office REIT reported net tangible assets per unit in Australia of $2.64 as of June 30.

Its independent directors described the Macquarie offer as indicative, highly conditional and non-binding.

Those conditions include the granting of due diligence access, the Charter Hall Group retaining its 13.4 per cent stake and the conclusion of arrangements with international institutional investors regarding their participation in the proposal.

“The independent directors have not formed a view at this stage as to the merits of the indicative proposal, nor have the independent directors agreed to facilitate the indicative proposal by allowing the consortium to undertake due diligence of the (Charter Hall Office REIT) Australian assets on an exclusive basis,” the trust’s responsible entity said in a statement.

The independent directors propose to hold talks with Macquarie Capital about the bid, and due diligence access could be granted after those discussions, they said.

Charter Hall Office REIT’s most valuable properties are the CitiCentre and Number 1 Martin Place buildings in Sydney.

Contracts were signed for the sale of its 14 US properties earlier this month, with the sales expected to be completed between October this year and May next year.