ING-Calan talks brought to light

Calan's new Epworth Eastern Hospital in Melbourne, which drew interest from ING

For many months last year, listed medical landlord and takeover target Calan Healthcare Properties Trust was in serious negotiations with ING in Australia - but such talks only came to light last week when ING in New Zealand bid to increase its stake in Calan.

Calan chairman Bruce Davidson said the trust had been planning a deal with ING in Australia for months but it all went askew when ING Property Trust managing director Andy Evans said he wanted to increase his stake in Calan and possibly make a takeover offer.

Davidson said Calan chief executive Miles Wentworth had worked over the Christmas break on the Australian deal, which had now been abandoned.

"There were several aspects to that deal, which was quite complicated," Davidson said. "It included the sale of several elements of the business, acquisitions and expansion and working with other ING assets in Australia.

"It was not a simple sale but it involved quite a complex set of transactions involving broad expansion of the trust in Australia. Discussions had terminated late last year and then they were re-instigated in a different format."

Calan had not told the market here about that deal because Davidson said it did not need to.

"There had been no agreement with Australia, we were not in a position to announce anything and when the other deal came out of the blue it was evident ING NZ were not aware of the discussions," Davidson said.

So was it Davidson who broke news of discussions to Evans?

"I'm not going into that," Davidson said.

"Different parties were taking legal advice on their different positions."

Advisers to ING have questioned why Calan had not declared its hand earlier and why, on the day Evans announced his bid, Davidson had not issued an NZX notice declaring he was in negotiations with another ING entity.

Another question being posed by listed property trust chiefs this week was Symphony Group's level of involvement in the Calan deal and how close shareholders, including Peter Francis, Robin Congreve and Colin Reynolds, were to the Calan action.

Symphony is half-owner of the manager of ING Property Trust, a deal done in August 2003 when ING bought Symphony Group's half-share in the manager of Paramount Property Trust.

Evans has fronted the joint venture and Symphony's owners have been silent about the potential for the scope of property interests they manage to climb to more than $500 million if the Calan deal succeeds.

ING advisers said they had dealt with Reynolds' son, Damon Reynolds, adviser to ING's manager.

Late last year, brokers were divided about Calan's attractions.

First NZ Capital's Jason Lindsay gave Calan a neutral rating in November. Mark Lister of ABN Amro advised on December 1 to hold units. Citigroup's Blair Cooper said on August 23 to sell.

On October 20 Forsyth Barr's Jeremy Simpson encouraged investors to accumulate.

Lister said the trust had revived itself in the last eight months, particularly after it finished selling non-performing property assets.

He said the offer was important because Calan was the last listed real estate trust in New Zealand not run by an external fund manager - in most cases based in Australia.

Its management contract is controlled by Calan Healthcare Properties, in the hands of Calan's founders - Martin Lyttelton and Brian Freestone. 

 
Who controls what

* Calan Healthcare Properties Trust is an NZX-listed entity managed by Calan Healthcare Properties.
* That entity is majority controlled by Nalac Investment Management, which is owned by the Calan Group.
* That company, in turn, is owned by trust founders Martin Lyttelton and Brian Freestone.
* ING Property Trust is managed by ING Property Trust Management.
* Formerly called Paramount Property Trust Management.
* Ownership divided between Symphony Investments and ING (NZ).
* Symphony Investments is owned by Symphony Group.
* The group owned by Robin Congreve, Oceania & Eastern Securities, James Yonge, Colin Reynolds and Peter Francis.