Analysts baulk at price put on Calan

Two analysts have rejected as too high the valuation of takeover target medical landlord Calan Healthcare Properties Trust in an independent report by Ferrier Hodgson.

Stephen Freundlich, associate analyst at UBS Investment Research, called Ferrier's Calan valuations "bullish", adding that ING Property Trust's offer remained fair.

Citigroup analyst Blair Cooper also questioned Ferrier's unit valuations.

"We find ourselves struggling with the valuation range calculated by the independent appraiser which seems too high," Cooper wrote in his report released yesterday.

Ferrier's report valued Calan at $1.41 to $1.55-a-unit compared with ING's offer of $1.25, half cash and half scrip. Ferrier called the ING offer unfair.

But Freundlich disagreed.

"ING's offer remains fair in our view and on dividend growth measure, it stacks up," he wrote in his report also out yesterday.

Even at $1.25, ING had offered a 7.8 per cent premium on UBS' $1.16 valuation. Calan had yet to demonstrate pricing power at reviews or significant rental growth ahead of historic levels.

Cooper also questioned what Ferrier's valuation could do to the deal, after indications this week that the high valuations might push ING out of the takeover offer.

"The gap between the value of the offer and the appraisal range looks like it could be too high a hurdle," he said, although he backed Calan's independent directors who recommended unitholders reject the offer.

ING was expected to open its offer next week but the Ferrier report prompted Andy Evans - head of its manager - to speculate on Monday that the deal could be called off.