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Highlights
- Irongate shareholders will get AU$1.90 in cash under the deal.
- Charter Hall will have 12% stake in the partnership while the Dutch Fund possesses the remaining 88% stake.
- The AU$1.3 billion deal highlights the growing battle among home-grown real estate participants to inflate their funds under management.
Fully integrated property group, Charter Hall Group (ASX:CHC), informed today that with its Dutch Pension Fund PGGM, it would buy Irongate Group (ASX:IAP). The real estate investor IAP rejected multiple offers from 360 Capital before accepting the offer from Charter Hall managed partnership (includes Charter Hall and PGGM).
Under the scheme of arrangement (SIA) between Charter Hall managed partnership and IAP, the partners will buy 100% stapled securities of IAP through the trust scheme of arrangements.
Financial metrics of the Irongate Group acquisition
The transaction received a nod from the IAP board as per the ASX announcement, following which the IAP shareholders will get cash consideration of AU$1.90 per stapled security, that is AU$92 million for 48.44 million stapled securities.
Under the deal, the IAP security holders will be able to retain the distribution (dividend) of 4.67 cents per IAP security for the period ending 31 March 2022.
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Charter Hall will have a 12% stake in the acquisition, and the PGGM will enjoy the rest 88%.
The partnership has also signed a memorandum of understanding (MoU) with 360 Capital to sell three property assets of IAP to 360 Capital for AU$256.7 million. Under the MoU, 360 Capital gets the option to purchase assets of IAP but is not obliged to buy them. Worth mentioning here is that the responsibility of funding the transaction lies with the partnership.
In a statement, Charter Hall said that it would acquire the fund management business of IAP for AU$5 million and AU$22.5 million will go into associated co-investment stakes.
On the development, David Harrison, CEO and managing director of Charter Hall commented:
Charter Hall mentioned that the transaction is subject to several conditions, such as receiving approval from the IAP shareholders, court, OIO, FIRB, to name a few.
The ASX-listed fund manager has selected Morgan Stanley Australia Limited and Barrenjoey advisory Pty Ltd as the financial advisors. Allen will take up legal advisor role.
Performance of Charter Hall shares
Image source: © Kiankhoon | Megapixl.com
On the ASX, Charter Hall shares are trading 1.98% up at AU$16.52 at 11:58 AM AEDT. The shares have generated 28% return in the past year, and the year-to-date return is 20%.
Also, Irongate Group shares were spotted trading 1.724% higher at AU$1.917 per share at 12 PM AEDT.
Road ahead!
Johannesburg stock exchange approval is required for the indicative implementation timetable and will be part of the scheme booklet, which IAP shareholders will receive. Charter hall expects that by May 2022, the scheme booklet will be sent. The partnership targets the transaction implementation in late July 2022.
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