Federation Centres and Novion Property Group (previously the CFS Retail Property Trust) have announced a merger to create one of Australia's larger real estate investment trusts with more than $22 billion in assets under management and invested across the full retail asset spectrum.
The merged entity will have a market capitalisation of $11 billion and will be, if approved, the second-largest listed manager of Australian retail assets and a top 10 listed manager of retail assets globally. Overall it will have $22 billion of retail assets under management across 102 retail assets with over $18.2 billion in annual retail sales.
The merger combines two highly complementary platforms to provide existing Federation and Novion investors with an enhanced investment proposition relative to each group on a stand-alone basis.
Federation, previously know as Centro Properties Group, has a large exposure to food-based centres and a half share in large malls across the country. Last week it unvelieved, with its co-owner the Perron Group, a $500 million redevelopment of The Glen shopping centre in Melbourne's south east.
Novion is the owner of large mixed-use malls, including Chadstone and the Emporium in Melbourne and Chatswod in Sydney. Its management took over control of the fund a last year when it was CFS Retail and run by the Commonwealth Bank.
Implementation of the merger requires the approval by Novion securityholders of Novion schemes of arrangement. Under the scheme, each Novion security will be exchanged for 0.8225 Federation securities, which implies a current Novion value of $2.55 per security relative to Novion's last close of $2.322 .
Based on the exchange ratio, existing Novion securityholders will own 64 per cent of the Merged Group and existing Federation securityholders will own 36 per cent.
Once the mergeris complete, Federation's current chief executive Steven Sewell will run the new group, while Angus McNaughton (chief executive and managing director of Novion) and Michael Gorman (deputy CEO and chief investment officer of Novion) will step down from their current roles.
