Dexus makes $320m takeover move on APN Property

The Darren Steinberg-led Dexus is becoming a funds powerhouse, with the move on APN poised to see it running listed trusts.

Dexus CEO Darren Steinberg. Picture: Britta Campion

Property group Dexus has made an audacious $320m bid for the APN Property Group as it forges further into funds management.

A successful takeover would see the group running two unlisted funds, property securities, and unlisted direct property funds.

Dexus has agreed terms with the Melbourne-based APN, which has a near $3bn property funds operation, positioning it to take its own funds unit to $23.9bn.

The move comes after the Darren Steinberg-led Dexus last month snared control of an unlisted $5bn AMP Capital-managed fund by winning the support of investors to merge it with its own diversified wholesale property trust.

The new deal has been backed by APN chairman and biggest security holder Chris Aylward, who has granted Dexus a call option over APN shares equivalent to 19.9 per cent of the register.

The offer price has been set at 91.5c per share and Dexus has entered a binding scheme implementation deed with APN. The price is a 50 per cent premium to APN’s close on Monday of 61c.

APN directors are backing the deal in the absence of a superior proposal and subject to an independent expert concluding the proposal is in the best interests of shareholders.

The directors, including chairman Mr Aylward, plan to vote their 33 per cent of the register in favour of the deal.

APN runs two listed real estate investment trusts, the APN Industria REIT and APN Convenience Retail REIT, and also manages direct unlisted property and securities funds.

They are expanding and on Tuesday the convenience trust acquired a portfolio of six service station and retail properties in Queensland for $59m in a deal brokered by JLL.

APN had $2.9bn of funds under management and $134m of co-investments in its managed vehicles. It has flagged a push into childcare and also real estate debt.

The deal would give Dexus a funds portfolio comprising $23.9bn that includes institutional wholesale capital, listed REITs, real estate securities and a direct unlisted property business.

Dexus wants to use its larger property platform to drive growth and performance for new and existing APN funds. It also gives the company access to new investors and said the deal would be accretive to adjusted funds from operations per security when the deal is completed in the next financial year.

“This transaction supports our strategic initiative of expanding and diversifying our funds management business, increasing our suite of funds on offer outside of wholesale funds into listed REITs, real estate securities funds and unlisted direct property funds,” Mr Steinberg said.

“The transaction also expands our investor network to include retail and high net worth capital.”

Mr Aylward said the Dexus proposal “represents compelling value to APN securityholders including a material premium to APN’s trading price”.

“We believe the combination of the two platforms will provide incremental growth opportunities for the APN business as well as its underlying funds, investors and team members,” he said.

APN chief executive Tim Slattery said Dexus’s property and funds management platform was “very well regarded and in combination with APN’s capabilities represents an excellent ongoing opportunity for our funds’ investors and our team”.

APN will vote on the deal in July.

Dexus is advised by bankers Macquarie Capital and lawyers King & Wood Mallesons. APN’s financial adviser is Grant Samuel and its legal adviser is Gilbert + Tobin.