Property minnows ripe for picking as Bolton, Cottle make their move

Larger trusts are protected by their complex structures, leaving smaller vehicles at the mercy of players such as sharemarket raider Nick Bolton and construction tycoon Ben Cottle.

Nick Bolton in his Melbourne office.

Sharemarket raider Nick Bolton and construction tycoon Ben Cottle have emerged with separate plays for companies at the small end of the property trust world in a sign of where corporate activity will focus this year.

With larger trusts protected by their complex structures, smaller vehicles – like the Australian Unity Office Fund which is in Mr Bolton’s sights, and accommodation company Eureka, in which Mr Cottle has built a stake – are now targets.

Mr Bolton, fresh from winning a $17.6m payday from beleaguered funds management giant Magellan Financial Group after snapping up options in its underperforming Magellan Global Fund, has been supported by media player Antony Catalano in building a stake in the office fund.

The tiny fund’s portfolio has shrunk to just over $250m in value. It has buildings in Sydney, Brisbane, Melbourne and Canberra. Its shares are trading at a deep discount after five failed takeover attempts from rivals.

Mr Bolton holds less than 5 per cent and is yet to reveal his strategy, although he is likely to press for faster returns to investors, or could even become bridesmaid for another party to acquire the trust.

Funds house Elanor Investors Group is believed to have weighed up a potential merger of its own listed office fund with the Australian Unity vehicle, though it is not known how Mr Bolton’s stake would play into such a move.

Mr Bolton shot to fame 15 years ago when at 26 he took on Macquarie Bank and Leighton Holdings over Queensland toll road operator BrisConnections and won. He has since been active in small property funds, including one run by Multiplex, in the wake of the Global Financial Crisis.

The Australian Unity fund has seen a series of unsuccessful takeovers, some of which were stymied by Melbourne-based Hume Partners, though a Hong Kong hedge fund is now also on the register. Takeover offers came from Charter Hall and Abacus, US investment giant Starwood and Aliro, but as they fell away the Australian Unity vehicle’s shares plunged.

Its suburban buildings have fallen out of favour in the wake of the pandemic and Mr Bolton will have his work cut out either getting them back into gear or pushing for sales.

By contrast, Mr Cottle has moved into the hot affordable accommodation sector, taking a stake in Eureka of about 19.3 per cent, effectively thwarting a bid from rival Aspen.

He is believed to want to work with Eureka to develop some of his private holdings into rental accommodation. This would see Eureka remain listed but give it access to a new pipeline, boosting its size and growing in NSW.

But Aspen has its supporters on the Eureka register, with fund manager Coopers Investments holding about 22 per cent.