More M&A to come for REIT sector

Bunnings’ landlord, BWP Trust, has made a move on Newmark Property REIT. Picture: Brendan Radke

Apparently, the $247m takeover offer by Bunnings landlord BWP Trust of Newmark Property REIT is not the only mergers and acquisition activity being talked about in the real estate space.

Sources say that another unannounced deal was also recently brewing but it has since gone quiet.

Suggestions are that the real estate sector is one to watch for takeover activity this year.

As well as the Newmark transaction, residential developer and park communities operator Aspen Group launched a takeover bid for Eureka Group, although sources believe it will need to offer a higher price from its current offer of 0.26 Aspen securities per share.

The offer currently values the target at 45c a share, which is below its trading price.

On Tuesday, Morgan Stanley analysts outlined in their research how the valuations of listed real estate trusts in some sectors are strikingly similar, which means the stars could align for a number of other merger deals.

Trading at similar values are the Dexus Industria REIT and the Centuria Industrial REIT.

Healthco Healthcare and Wellness REIT is also trading at a similar multiple to the Charter Hall Social Infrastructure REIT.

Mirvac Group and GPT Group are lining up in terms of their value, according to the research findings, as are convenience retail landlord Region Group (formerly SCA Property Group) and major shopping centre landlord Vicinity Centres.

The BWP Trust is offering $1.39 per share for the Morgan Stanley-advised Newmark Property REIT, a 43.1 per cent premium to the closing price of Newmark securities of 97c on January 23.

The scrip bid equates to 0.4 of its shares for each Newmark share.

The offer, though is still a 17 per cent discount to Newmark’s reported $1.68 net tangible assets.

BWP has $3bn of assets and Newmark $600m, but both companies are similar in that they own large format retail boxes with the same major tenant.