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Market Watch - June 2018
Where will all the REIT money go? Market commentators believe that the recent A$33bn scrip-and-cash takeover of West field Corp (ASX:WFD) - the largest takeover in Australia’s corporate history - is likely to impact other stocks listed in the domestic REIT sector. The question is how much of the A$7bn cash component of the consideration - paid to WFD investors on 7 June –will find its way back into the market? Factoring in the proportion of global investors on the West field register who will simply repatriate their cash component and investors who take some profits off the table, analysts estimate that between A$1.5bn-A$2bn could be left to reinvest. Predicated on investors maintaining asset allocation, the bulk of this could flow into the domestic listed REIT space. We believe that REIT plays with offshore retail exposure(mirroring WFD) such as Goodman Group (ASX:GMG) and Lend lease Group (ASX:LLC)are likely to be the main beneficiaries. On 29 May, US fund manager Blackstone announced a $3.1bn bid to buy out commercial property investor Investa Office Fund (ASX:IOF). Although, one tenth the size of the West field deal, the delisting of Investa will result in additional cash looking for a new home in the domestic REIT space.