Key Takeaways
- • City Index Eleven, an investment company linked to the former Murakami Fund, extended its tender offer for Sankei Real Estate Investment Corporation (SRE) to Nov. 30 from the original Nov. 10 deadline, filed with the Kanto Local Finance Bureau on Nov. 9.
- • The tender price remains unchanged at ¥125,000 (approximately $790) per unit, with the offer having begun on Sept. 28.
- • A private equity fund submitted a non-binding letter of intent on Nov. 5 considering a competing bid at least 5% above the current price, with a final proposal expected in late November or later.
- • The extension gives unit holders more time to decide between tendering into the existing offer or waiting for the competing bid, which could trigger a bidding war affecting SRE unit prices and other REIT issues.
Summary
The extension comes as a private equity fund prepares a competing proposal. According to a letter of intent the fund submitted on Nov. 5, it is considering a purchase at a level at least 5% above the current price, based on a 20-business-day purchase period. It expects to submit a final proposal in late November or later. SRE said the previous week that it had received this non-binding letter of intent, in which the fund stated it would seriously consider a competing proposal.
SRE is a real estate investment trust affiliated with Sankei Building and has built its assets within the Sankei Building Group. The tender offer aims to take the company private, and if successful would significantly change its unit holder base.
Unit holders now face a choice between tendering into the existing offer or waiting for the competing proposal to take concrete shape. If the PE fund formally presents its bid, the situation could develop into a bidding war over the purchase price, potentially affecting the price of SRE's investment units as well as trading in other REIT issues.
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