A unit of Ontario Municipal Employees' Retirement System sweetened its bid for Australian property company Investa Office Fund to A$3.35 billion ($2.4 billion), escalating a bidding war with Blackstone Group.
The C$95 billion ($72.8 billion) Toronto-based pension fund's Oxford Properties Group real estate unit raised its bid to A$5.60 a share, topping Blackstone's latest A$5.52 offer, according to a statement Thursday. Investa Office shares were unchanged at A$5.54 at 3:10 p.m. in Sydney.
Oxford has agreements with Investa Office's major shareholders to buy 19.99% of the firm, contingent on Blackstone's bid not being approved. Blackstone has said its latest bid is conditional on Investa increasing the break fee to A$33 million if it accepts a rival offer.
Investa Listed Funds Management Ltd., which manages the office fund, said investors should take no action on Oxford's "unsolicited, non-binding, indicative" bid, and that it continues to unanimously recommend Blackstone's offer in the absence of a superior proposal, according to the statement.
The successful bidder will get 35 properties stretching from Perth on Australia's west coast to Sydney and the eastern seaboard, according to Investa's website. The fund receives rental income from more than 400 tenants, including government agencies.
Australia's office sector generated total returns for investors of 14.7% over the year to June, the most since 2008, driven by an outperformance in Sydney's office market, according to a report by Savills.
Investa has attracted suitors since at least 2015, when Dexus Property Group proposed a deal valued at about A$2.5 billion, a tie-up that was subsequently rejected by unitholders. Cromwell Property Group made separate approaches in 2016 and 2017.
OMERS is one of Canada's largest pension funds. Oxford has $50 billion of real estate assets under management, mostly in Canada and the U.S.