TORONTO, ONTARIO — (Marketwired) — 11/10/13 — Canada Pension Plan Investment Board issued a joint ASX release with DEXUS Property Group today. Below follows the release.
Recommended proposal to acquire Commonwealth Property Office Fund
DEXUS Property Group (“DEXUS”) refers to its announcement on 11 October 2013 in relation to the indicative, non-binding proposal (the “Proposal”) made jointly with Canada Pension Plan Investment Board (“CPPIB”) (together the “Consortium”) to Commonwealth Managed Investments Limited (“CMIL”) the Responsible Entity of the Commonwealth Property Office Fund (“CPA”) to acquire all of the issued units in CPA(1).
DEXUS today announced that:
Summary of the Recommended Proposal
The Recommended Proposal provides for the following cash and DEXUS scrip consideration (expressed per CPA Unit):
CPA-s current distribution guidance of 6.65 cents per CPA Unit for the year ending 30 June 2014 assumes a payout ratio of 75% of FFO. Based on an assumed implementation date of 31 March 2014, the total cash consideration component of the Recommended Proposal is estimated to be 72.65 cents per CPA Unit. The actual total cash payment may be higher or lower than 72.65 cents per CPA Unit, depending on the operating performance of CPA and the actual implementation date.
CPA Unitholders will be entitled to receive and retain the CPA distribution for the six months ending 31 December 2013, which is expected to be approximately 3.3 cents per CPA Unit. If the Recommended Proposal is implemented, this will be the final distribution paid by CPA to CPA Unitholders.
DEXUS stapled securities issued to CPA Unitholders under the Recommended Proposal will have a pro-rata entitlement to DEXUS distributions for the period to 30 June 2014 from the date of issue of the DEXUS stapled securities under the Recommended Proposal, and will rank equally with all other DEXUS stapled securities for subsequent distribution periods.
The pro-forma earnings and NTA impact of the Recommended Proposal on DEXUS-s key financial metrics is expected to remain within the ranges provided in the announcement of the initial Proposal on 11 October 2013 (adjusting for the change in the assumed implementation date from 31 December 2013 to 31 March 2014 and the announced CPA property revaluation(2)). DEXUS will provide financial forecasts in conjunction with the release of a Scheme booklet following execution of a binding Implementation Agreement between DEXUS and CMIL.
The Consortium believes this Recommended Proposal is compelling and, if implemented, provides CPA Unitholders with an attractive premium for their units and on-going participation in the benefits associated with an investment in DEXUS.
Process Agreement with CMIL
The Consortium has entered into a conditional Process Agreement with CMIL (see copy attached) under which the parties must negotiate in good faith to agree a binding Implementation Agreement by mid December 2013.
Under the Process Agreement, CMIL has granted the Consortium a period of exclusivity to conduct due diligence. The parties currently expect that due diligence will be completed within four weeks followed by entry into a binding Implementation Agreement.
The Independent Directors of CMIL have confirmed that, if the Recommended Proposal proceeds, they will recommend that CPA Unitholders vote in favour of it at any meeting in the absence of a superior proposal and subject to an independent expert opinion that the Recommended Proposal is in the best interests of CPA Unitholders.
The Process Agreement confirms that the Recommended Proposal is subject to a number of conditions, including:
Agreement with CBA
In its announcement on 11 October 2013, DEXUS announced that it had submitted to CBA an indicative and non-binding ancillary proposal outlining a potential facilitation of the Proposal and transition of the management of CPA (“Ancillary Proposal”).
DEXUS and CBA have now agreed an indicative term sheet for the Ancillary Proposal, including a facilitation payment of $41 million and that CBA will grant DEXUS due diligence in relation to the management arrangements of CPA.
DEXUS and CBA have today entered into a Confidentiality and Exclusivity Deed (“Deed”). The Deed, including the term sheet for the Ancillary Proposal (a copy of which is also attached) sets out the terms of the arrangements between the parties, including exclusivity arrangements in favour of DEXUS that extend until 24 December 2013.
The Ancillary Proposal is subject to implementation of the Recommended Proposal, due diligence and execution of a binding Facilitation Deed.
Attachments
Note: Australian Dollars (AUD) have been used as the reference currency for this release.
About DEXUS
DEXUS Property Group (DEXUS) is one of Australia-s leading real estate groups, investing directly in high quality Australian office and industrial properties. With a total of $13 billion of assets under management, DEXUS also actively manages office, industrial and retail properties located in key Australian markets on behalf of third party capital partners. DEXUS manages an office portfolio of over 900,000 square metres across Sydney, Melbourne, Brisbane and Perth and is one of the largest institutional owners of office buildings in the Sydney CBD, Australia-s largest office market. DEXUS is a Top 50 entity by market capitalisation listed on the Australian Securities Exchange under the stock market trading code -DXS- and is supported by more than 18,000 investors from 15 countries. With over 25 years of experience in commercial property investment, development and asset management, DEXUS has a proven track record in capital and risk management, providing service excellence to tenants and delivering superior risk-adjusted returns to investors.
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DEXUS Funds Management Ltd ABN 24 060 920 783, AFSL 238163, as Responsible Entity for DEXUS Property Group (ASX: DXS)
About Canada Pension Plan Investment Board
Canada Pension Plan Investment Board (CPPIB) is a professional investment management organization that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits on behalf of 18 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments. Headquartered in Toronto, with offices in London and Hong Kong, CPPIB is governed and managed independently of the Canada Pension Plan and at arm-s length from governments. At June 30, 2013, the CPP Fund totalled C$188.9 billion of which C$20.9 billion represents real estate investments. For more information about CPPIB, please visit .
CPPIB has agreed to the statements made by and references to CPPIB in this release. However, CPPIB has not authorised any of the statements made by DEXUS or the references to or concerning DEXUS Property Group in this release.
Contacts:
DEXUS
Investor queries
David Yates
+61 2 9017 1424 or M: +61 418 861 047
DEXUS
Media queries
Martin Debelle, Citadel
+61 2 9290 3033 or M: +61 409 911 189
CPPIB
Media queries, Canada
Linda Sims
+1 416 868 8695
CPPIB
Media queries, Australia
Nigel Kassulke, Cannings
+61 2 8284 9990 or M: +61 407 904874