Charter Hall, Abacus sell out of Australian Unity Office Fund

Charter Hall and Abacus have sold out of Australian Unity Office Fund in an aggressive bet ahead of next week’s takeover vote.

Property companies Charter Hall and Abacus Property Group have made a dramatic play to dump their 19.9 per cent stake in the Australian Unity Office Fund in an aggressive tactic to improve the chances of their bid for the trust getting over the line.

The takeover suitors were hampered as they could not vote on their own scheme and the play on Wednesday night orchestrated by investment bank JPMorgan will likely see stock go into the hands of investors who want the scheme to go ahead at a meeting to vote on it next Thursday.

The play signals that property companies are willing to bet that commercial property values will keep rising despite concerns they are at a high point in the currently hot sectors of office towers and warehouses.

Many property stocks are trading above valuation, with shopping centre companies the main drag on the real estate investment trust sector as malls are still struggling with poorly-performing department store anchors.

The two companies have been stalking the Australian Unity-run target since June when they took the interest by raiding the register and then lodging a takeover bid that they sweetened a month later.

But the bid appeared to have stalled as one of the top shareholders, the Scanlan family-backed Hume Partners last week boosted its stake in the property fund from 6.65 per cent to 7.88 per cent in a sign that it would try to vote the deal down.

JPMorgan was working to place the stock at $2.95 a share, a 1.3 per cent discount to the fund’s closing price of $2.99. By offloading the $96m interest Abacus and Charter Hall have boosted the chances of the scheme getting up, particularly as the hedge funds on the register are depending on it getting over the line to reap their returns.

The takeover would see Charter Hall and Abacus take control of the $600m-plus portfolio and then carve it up, and is a rare play by two listed property groups to take over one of their rivals.

The Australian Unity-controlled fund was under offer at $3.04 a share, up from an initial $2.95 a share, valuing the business at close to $496m.

The trade was for about 32.4 million shares, which represented the entire stake held by Charter Hall and Abacus according to a term sheet sent to investors.

The books closed at 6.30pm on Wednesday and the trade will settle on Friday giving the new owners of the stock just days to vote and even setting the scene for further rumblings on the volatile register.

Trust manager Australian Unity has yet to comment but the surprise stock move may have caught it off guard.