Centuria's 17% stake in Propertylink spurs merger expectations

Propertylink is expected to merge with its largest shareholder, Centuria Capital, another Sydney-based real estate fund manager.

Centuria announced at the weekend that it now holds 17% of Propertylink, having acquired a 9.3% stake, while its industrial trust, Centuria Property Funds No 2, had taken 7.7%.

Together, they paid a total of AUD97m (€65m).

While some believe the share acquisition is the precursor to an attempt to take over Propertylink, others say a merger between Centuria and Propertylink is far more likely.

One source, an investor in both listed companies, told IPE Real Estate: “Talk in the market is that a takeover is unlikely. A merger is a more likely scenario.”

The source believes negotiations could be drawn out, because both Centuria and Propertylink will have to bring shareholders along with their plan and agree on pricing of a scrip swap.

Stuart Dawes, CEO of Propertylink, could not be reached, but told Australian media earlier that his initial response was to welcome the new investors.

Dawes said he was unaware of the intentions or initiatives of either Centuria Capital or Centuria Industrial REIT, but was open to discussions to determine if any strategic initiatives proposed would be in the best interests of Propertylink security holders.

Centuria’s CEO, John McBain, is not discussing his intentions publicly.

Centuria began life running syndicates and later unlisted funds before moving into the listed arena. Today, it manages AUD4bn worth of property.

One of its newest unlisted trusts is the Centuria Zenith Fund, a five-year closed-ended, single-asset fund set up to house its 50% stake in two grade-A office towers in Chatswood – a secondary commercial centre north of Sydney’s central business district. Centuria and BlackRock purchased the towers jointly for AUD279m last year.

Propertylink, which listed last year, has a direct portfolio of AUD695m and manages about AUD1.2bn in industrial and office assets across nine funds for global investors.

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