Alex Waislitz slams Brookfield Property Group’s proposed $1.17bn Aveo takeover

Billionaire Alex Waislitz says Brookfield’s ‘highly opportunistic’ $1.17bn Aveo bid duds minority shareholders.

Thorney Opportunities Group chairman Alex Waislitz. Picture: David Geraghty

Billionaire investor Alex Waislitz has slammed Brookfield Property Group’s proposed $1.17 billion takeover bid for Aveo, one of the nation’s largest retirement village operators, saying he was “quite shocked” that the company’s independent directors and other investors were supporting the deal.

In mid-August the Aveo Board entered into a scheme of arrangement to sell to Brookfield at a price of $2.15 per share ex-dividend, 40 per cent below the company’s net tangible asset (NTA) backing.

“Such a steep discount to NTA is almost unheard of in a takeover offer. If the deal succeeds it will deprive minority shareholders of significant future value to which they should be entitled,’’ Mr Waislitz wrote in his chairman’s letter to investors in his listed Thorney Opportunities Group, which holds a 0.5 per cent shareholder in Aveo.

“I believe the bid is highly opportunistic. It was made at the bottom of the housing price cycle and at the current price does not offer minority shareholders anywhere near the value they should be getting. This is especially so given the much improved housing price outlook and the growing importance of the retirement sector. In addition the bid does not reflect the full potential value of Aveo’s very high quality land bank of development sites, many of which already have their permits.

Mr Waislitz provocatively questioned if Aveo’s independent directors Walter McDonald, Jim Frayne, Diana Saw and Kelvin Lo believed Aveo’s stated NTA.

“Do they not have confidence in their executive management team’s ability? Perhaps they are worried that the company urgently needs a cash injection, in which case I am sure they would have been better placed to test the market to see if existing or new shareholders might want to invest at a discount,’’ the billionaire wrote, calling on the deal to be blocked.

The board recommendation for the Brookfield bid remains subject to an independent expert concluding the proposal was in the best interests of shareholders.

It is also subject to the approval of 75 per cent of shareholders at a planned October meeting.

“Notwithstanding some negative media and what has been a challenging operating environment, I believe Aveo’s existing management team is more than capable of overcoming any short-term problems the company may have and the company can deliver substantial future upside for all shareholders,’’ Mr Waislitz wrote.

In August Aveo reported a $213.4 million annual loss.