Dexus falls short of threshold as IOF tussle heats up

Dexus Property Group’s $2.5 billion proposal for Investa Office Fund has attracted 60 to 70 per cent support in proxy votes, leaving it short of the 75 per cent threshold required to approve the deal at a shareholder meeting in Sydney this morning.

Yet while the outcome of the vote was predetermined by Cromwell Property Group’s acquisition on Tuesday of CBRE Clarion’s 9.8 per cent stake in IOF, the vehicle’s future remains unclear.

Cromwell has declined to reveal its intentions and yesterday declared it was “delighted” to join the listed landlord’s register. However, it’s understood the group will instigate meetings with all IOF stakeholders in the wake of the EGM and, as reported this week, a platform deal is the most likely outcome of these discussions.

However, today’s meeting may provoke fiery exchanges from investors as it marks the culmination of a lengthy and, as one key player described it, “incredibly confrontational” contest that has divided IOF’s register.

The debate on the overhaul of Westfield Group in 2014 was similarly shrill and some observers pointed out that — as with that deal — IOF’s vote may confront a last-minute hurdle that results in an adjourned meeting. But if the Dexus bid meets its inevitable defeat, the next question is whether the fund’s independent board can survive.

While many investors have voiced support for the manner in which IOF’s independent directors, led by Deborah Page, have tackled Morgan Stanley’s exit from Investa, others have sharply criticised the decision to back Dexus’s scrip-and-cash bid.

Simmering tensions between IOF and its unlisted stablemate, ICPF, have morphed into open warfare, and as the wholesale vehicle now controls the platform, some in the sector are betting the takeover defeat will serve as a catalyst for board renewal.

ICPF has already indicated it will install new directors but few expect the fund to roll the independent board committee. Rather the platform’s new owners may simply ask whether Ms Page and her two fellow IBC members, Peter Rowe and Peter Dodd, who were installed by Morgan Stanley, would like to consider their positions.