(Bloomberg) -- Barry Sternlicht’s Starwood Capital Group, one of the largest real estate investors worldwide, plans to buy out shareholders in CA Immobilien Anlagen AG, offering a 12% premium to Friday’s closing price to value the Austrian commercial property group at 3.4 billion euros ($4.2 billion).
Starwood, which raised its initial 26% stake in CA Immo to 30% over the course of 2020, will offer other holders 34.44 euros per share, it said in a statement late Friday. The buyout will be formally triggered under Austrian law when Starwood passes the 30% ownership threshold.
With the move, Starwood is doubling down on its wager on CA Immo’s prime German office space and its big land bank in the capital Berlin and other German cities. The pandemic triggered a collapse in property stocks last spring, and the offer price is still 18% below CA Immo’s 2020 high of 41.85 euros.
The bid is the equivalent to CA Immo’s “triple-net” asset value per share, the NAV adjusted to reflect the current market value of the company’s debt and financial derivatives, and to include the deferred tax which would become payable if the company sold all its property.
“We believe the offer provides a welcome opportunity for shareholders and convertible bondholders to realize liquidity,” Krysto Nikolic, Starwood’s head of real estate for Europe said in the statement. “We look forward to continuing to support the company, and in connection with the offer, it is one of Starwood Capital’s objectives to maintain CA Immo’s investment-grade credit rating.”
It’s a bet against the concern that business will require less space than pre-Covid as the global recession deepens and companies brace for a new normal. Surveys show companies plan to make more use of working from home once the pandemic subsides, with more than half intending to reduce the amount of workspace they use.
Starwood first bought a 26% stake in CA Immo for 758 million euros, or 29.50 euros per share, in 2018, following a brief takeover tussle involving cross-town rivals Immofinanz AG and S Immo AG. It started to add shares in piecemeal transactions last April, coming within striking distance of the 30% trigger in the last week of the year. CA Immo’s second-biggest shareholder is S Immo with a 6% stake, while 6% of the stock is held as treasury shares.
Starwood’s SOF-11 Klimt CAI Sarl vehicle, which will do the bidding, will also launch an offer for CA Immo’s convertible bonds that it doesn’t already own. The share offer price is on a cum-dividend basis, meaning it would be reduced by the amount of a dividend declared between announcement and settlement. There will be no minimum acceptance threshold.
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