Investors are losing patience with Cromwell in its long-running battle for control of the $2.7 billion Investa Office Fund, with some saying it its getting to the "unreasonable" level.
Both groups reported their half-year results last week, but limited details were forthcoming. The tussle started in April last year, when Cromwell snared a 9.64 per cent stake in IOF at the eleventh hour, which stopped the DEXUS Property offer in its tracks.
Since then Cromwell has made declarations it wants to make an offer, but wants more information from IOF's manager before launching a formal bid. In response, IOF says it has done so, but any more information is seen as market sensitive and not deemed appropriate to release until a formal offer is made.
The impasse is starting to wear thin with investors.
Winston Sammut, the managing director of Folkestone Maxim Asset Management, said it was getting "confusing" and he wished there was improved communication from Cromwell.
Cromwell's chief executive Paul Weightman said he had received Foreign Investment Review Board approval to acquire the stapled securities in IOF greater than the 10 per cent threshold prescribed under the Foreign Acquisitions and Takeover Act.
At the group's results briefing on Friday, Mr Weightman told analysts he was "very patient" in the IOF tussle.
"We are being very patient, but we think there should be more engagement [from IOF]," Mr Weightman said.
"Despite IOF's assertion that there has been no correspondence since its February 3, 2017 announcement, there has been continual correspondence and communication in relation to this matter between the advisors to Cromwell and IOF, albeit not the independent directors, up until the week ending February 17.
" As announced on 20 February 2017, Cromwell sees value for IOF at a range of $4.45 per IOF security up to $4.75 per IOF security."
One of the requests from Cromwell is about the valuations method at the IOF-owned 151 Clarence Street property.
Cromwell reported a first-half operating profit of of $78.7 million, or 4.5¢, per security, which was about 2 per cent below brokers' general forecasts of 4.6¢ps, which represents about a 12 per cent decline on the previous corresponding period.
The variance was due to lower-than-expected net property income and slightly higher corporate overheads.
Brokers at Macquarie Equities said Cromwell continues to offer an attractive initial dividend for yield-focused investors (about 8 per cent).
"Despite this, with leasing risk in 2017 and 2018, the distribution per security remaining above our forecasts, debt funded and the stock trading around our price target, we have an Underperform recommendation on the stock."
Sholto Maconochie, the head of Australia real estate at CLSA, said there has been no engagement between IOF and Cromwell since IOF announced on February that it was unable to agree to a confidentiality agreement to provide Cromwell with due diligence.
"We envisage three possible outcomes for the prolonged IOF merger and acquisition saga. Despite IOF extending the option to acquire 50 per cent of the Investa Office Management Platform, we view this as sub-optimal with 1.2 per cent FFO accretion being offset by 1.6 per cent net tangible asset dilution and 120 basis points higher gearing and governance concerns," Mr Maconochie said.
Meanwhile, Lendlease is the last major property group to report its interim results on Monday.
There are suggestions the global infrastructure and construction group has appointed advisors to source a capital partner for its $1.5 billion retirement village business.
Brokers said there was some "trading activity" in Lendlease's exchange-traded options last week, indicating there could be some update at the results.
Lendlease has a portfolio of about 12,500 retirement units across 71 villages in most states, and develops and manages the portfolio.
Lendlease chief executive Steve McCann identified the company's intention to partially recycle capital out of its retirement business at its investor day in October 2015.
The company intends to keep its current weighting to investments of about 30-40 per cent even after partially recycling out of retirement, Tarun Gupta, the Lendlease chief financial officer said.
