Based on the information currently in the market, the assessment of values given to Investa Office Fund (IOF) securities by independent analysts falls within a range of $4.27 to $4.71 (with an average value of $4.45).
Based on current, publicly available information Cromwell sees value for IOF at a range of $4.45 per IOF security (Cromwell’s initial proposal) up to $4.75 per IOF security.
If Cromwell Property Group (Cromwell) is provided access to sufficient information and that information supports an improvement to Cromwell’s assessment of value, Cromwell expects to target a revised offer price at the upper level of independent analyst’s value range.
As a material investor, and bidder, Cromwell is concerned that Investa Listed Funds Management Limited (ILFML) has not disclosed material information to the market. It is concerned that this lack of information means the current IOF security price may not accurately reflect the future value of IOF.
In particular, IOF has recently entered into a number of material leases that will have a significant impact on IOF’s cash flows over the next 3 years. There has been very limited information provided on these leases and certainly not enough to be able to form a view on future cash flows and hence a value for IOF’s securities.
To ensure a fully informed and efficient market, Cromwell expects that certain information be included in IOF's half yearly results on 23 February 2017. The following information is material to understanding the value of IOF and should be provided to the market and all IOF securityholders.
Information for full disclosure
- Material information regarding leases executed since 30 June 2016 including rent and incentives
- Maintenance and improvement capital expenditure for the next 3 years
- Forecast incentives for the next 3 years
- How IOF intends to fund capital expenditure (including development) and incentives during the next 3 years
- Details of the valuation methodology applied to the Clarence Street development
- Disclosure of implications on IOF of a change of control including payments to debt/hedging providers, advisers and staff as well as any remaining tail fee arrangements to IOF’s advisers for the sale process undertaken in late 2015, which culminated in the unsuccessful Dexus scheme
- Detail on interest rate hedging entered into since 30 June 2016
- Details of the basis of the current Macquarie advisory engagement, including any linkage to previous engagements
Cromwell has offered to disclose the identity of the debt and equity funders supporting its proposal upon execution of a market based confidentiality agreement.
Cromwell continues to be available to engage with ILFML and is committed to providing a fully funded cash offer for the equal benefit of all securityholders of IOF subject only to completion of due diligence and FIRB approval.