Property merger plan kicks off

The takeover offer by Dutch-owned ING for listed New Zealand landlord Urbus Properties opens tomorrow and if successful will result in a new $800 million real estate entity.

One analyst has viewed the offer positively, saying there seems to be almost no reason why Urbus shareholders would repel it.

The $400 million ING Property Trust is taking over the $400 million Urbus by asking shareholders and noteholders to swap their script for units.

ING then plans to swallow Urbus, creating a force to compete against Australian-run property giants such as Kiwi Income Property Trust, Macquarie Goodman Property Trust, various guises of AMP, Multiplex and Centro Properties Group.

The deal's genesis dates back to last July when the Hodge family sold the Urbus management to ING for about $25 million.

ING issued its takeover notice to the NZX on April 12, after ABN Amro Craigs analyst Mark Lister listed a string of reasons why Urbus shareholders were likely to jump at the offer, which he predicted would succeed.

"The conversion rate looks reasonable," Lister said. "At 98 per cent, it's almost one-for-one.

"The Urbus board is recommending it, so that's another tick. Because ING already manages Urbus, to some extent the two are effectively merged so for the takeover not to go ahead would leave Urbus in limbo."

Other benefits included the potential for more growth, better liquidity, borrowing capacity and higher market profile.

The deal could also enrich ING management, which would earn better fees out of controlling more property, Lister said.

"I'm sure that comes into their thinking - there's an incentive there to grow assets under management because the managers get paid more."

ING asked for an independent report on the deal from Bancorp, which found the takeover offer fair and reasonable.

Horwath Porter Wigglesworth's independent report for Urbus noted the company was called Waltus until May 2001. Waltus merged 27 property syndicates to create a new entity, which later changed its name.

Horwath concluded that the offer was fair and would provide investors with a larger investment in property, access to a vehicle with less debt, greater liquidity, better exposure to prime CBD and retail assets that were performing well, and an association with the global ING brand.

The offer

* Urbus shareholders, convertible noteholders and mandatory convertible noteholders are being asked to swap their scrip for units in ING Property Trust.

* For each Urbus share, investors are being offered 98 per cent of one ING unit.

* The trust's $400 million takeover offer opens tomorrow and closes on June 3.

* Then, the controversial Urbus, which had its genesis in property syndicator Waltus, will disappear.

* If successful, ING will delist Urbus, continuing a trend that has seen a shrinkage in the number of property vehicles listed on the NZX.

* The invasion of Australian property giants here is partly the impetus for the deal.

* Trust managing director Andy Evans says expansion is the key to survival.