Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

The bid by the Invesco parent company (Invesco Real Estate and affiliates) for <a href="https://www.smartkarma.com/entities/invesco-office-j-reit-inc" target="_blank" data-smartkarma-citation="entities:7414:1" rel="noopener">Invesco Office J Reit (3298 JP)</a> turned out <a href="http://www.invesco-reit.co.jp/file/en-news-975727cafb8aab7580ce3ec700fa052bb37d38ca.pdf" target="_blank" rel="noopener">successful</a>, and the bidders gained 5,727,676 units out of the 8,802,650 units out in the float. They now own 65.07% (having started with 6%) so this will end up going to an EGM.As described in the original Notice concerning the Statement of Opinion (Support) on Tender Offer by Invesco Group <a href="http://www.invesco-reit.co.jp/file/en-news-8fee20272c335cc329d5ca0d2f9cb85667d43d11.pdf" target="_blank" rel="noopener">released</a> by IOR on 17 June and in line with my earlier insights, there will be an EGM which will aim to squeeze out minorities. That would theoretically require a two-thirds vote to change the Articles of Incorporation. The key date is 31 October 2021 because that is the end of the current (15th) fiscal period. The buyer should try to get the squeezeout accomplished by the end of that period, and if possible, to push it onward to a new fund on or before that date which can be declared to be distributed so that the tax conduit remains in place. The language in the Opinion says... <blockquote>Additionally, the Tender Offerors intend to request the Investment Corporation to convene an extraordinary unitholders’ meeting before the end of October 2021, which is the end of the 15th fiscal period of the Investment Corporation (meaning the last day of the fiscal period, hereinafter the same), and amend its articles of incorporation to change the end of the 15th fiscal period from October 31, 2021 to April 30, 2022.</blockquote>There is separate language which says there will be no more dividends for the period ended 31 October 2021. Investors who hold on to the other 34.93% are now long a thing which will not earn anything in future for them. Who still owns units? What does that mean? Is there an arb? Are there index trades? The answers to this and more below the fold.

The bid by the Invesco parent company (Invesco Real Estate and affiliates) for Invesco Office J Reit (3298 JP) turned out successful, and the bidders gained 5,727,676 units out of the 8,802,650 units out in the float. They now own 65.07% (having started with 6%) so this will end up going to an EGM.As described in the original Notice concerning the Statement of Opinion (Support) on Tender Offer by Invesco Group released by IOR on 17 June and in line with my earlier insights, there will be an EGM which will aim to squeeze out minorities. That would theoretically require a two-thirds vote to change the Articles of Incorporation. The key date is 31 October 2021 because that is the end of the current (15th) fiscal period. The buyer should try to get the squeezeout accomplished by the end of that period, and if possible, to push it onward to a new fund on or before that date which can be declared to be distributed so that the tax conduit remains in place. The language in the Opinion says... Additionally, the Tender Offerors intend to request the Investment Corporation to convene an extraordinary unitholders’ meeting before the end of October 2021, which is the end of the 15th fiscal period of the Investment Corporation (meaning the last day of the fiscal period, hereinafter the same), and amend its articles of incorporation to change the end of the 15th fiscal period from October 31, 2021 to April 30, 2022.There is separate language which says there will be no more dividends for the period ended 31 October 2021. Investors who hold on to the other 34.93% are now long a thing which will not earn anything in future for them. Who still owns units? What does that mean? Is there an arb? Are there index trades? The answers to this and more below the fold. 

Invesco Real Estate Deal for Invesco Office (3298) Successful - Now For the Aftermath

Alpha-Centric ESG Research

Kyle Rudden

Announcements keep on coming from <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">Singapore Exchange (SGX SP)</a> and its SGX FIRST sustainable investing platform. Weeks after launching Climate Impact X – SGX's carbon exchange joint venture with DBS, Standard Chartered, and Temasek – the exchange announced (on 14 June) the launch of the <a href="https://www.smartkarma.com/entities/sgx-nikkei-esg-reit-index-futures" target="_blank" data-smartkarma-citation="entities:33480:1" rel="noopener">SGX Nikkei ESG-REIT Index Futures (JRTA INDEX)</a> contract.For SGX, the launch further solidifies its position as Asia's leading financial exchange for all things sustainable investing and finance (and of course, REITs). For investors, the ESG-REIT Index futures contract expands the menu of products for REIT-related ESG investing. That is far more significant than it sounds; Real Estate is a sleeping ESG giant of sorts, and investment products are lacking.Therein lies the second of two goals for this Insight. The first is, rather obviously, to delve into the SGX Nikkei ESG-REIT product – the underlying index and futures contract. The second is to take it as an opportunity to broach an important, but often underrated, topic – the relationships between ESG and the Real Estate sector, including REITs. Much of it positive, or at least potentially so.Think about it. One billion buildings in the world already, and expected to double by 2060.

Announcements keep on coming from Singapore Exchange (SGX SP) and its SGX FIRST sustainable investing platform. Weeks after launching Climate Impact X – SGX's carbon exchange joint venture with DBS, Standard Chartered, and Temasek – the exchange announced (on 14 June) the launch of the SGX Nikkei ESG-REIT Index Futures (JRTA INDEX) contract.For SGX, the launch further solidifies its position as Asia's leading financial exchange for all things sustainable investing and finance (and of course, REITs). For investors, the ESG-REIT Index futures contract expands the menu of products for REIT-related ESG investing. That is far more significant than it sounds; Real Estate is a sleeping ESG giant of sorts, and investment products are lacking.Therein lies the second of two goals for this Insight. The first is, rather obviously, to delve into the SGX Nikkei ESG-REIT product – the underlying index and futures contract. The second is to take it as an opportunity to broach an important, but often underrated, topic – the relationships between ESG and the Real Estate sector, including REITs. Much of it positive, or at least potentially so.Think about it. One billion buildings in the world already, and expected to double by 2060.

SGX Nikkei ESG-REIT Index Futures Launch Is an Ideal Backdrop for an Important Topic: ESG and REITs

Yesterday, investors were on tenterhooks waiting and wondering about a possible extension to Starwood's Tender Offer for <a href="https://www.smartkarma.com/entities/invesco-office-j-reit-inc" target="_blank" data-smartkarma-citation="entities:7414:1" rel="noopener">Invesco Office J Reit (3298 JP)</a>. I fully expected them to extend - it cost them nothing to do do so.But they did not extend, or bump the price in face of Invesco Real Estate's announcement last week (and update Monday) that they were almost ready to launch, almost had funding lined up, and would likely launch on the 18th of June and bid ¥22,750/share. Today we get the <a href="https://disclosure.edinet-fsa.go.jp/E01EW/download?uji.verb=W0EZA104CXP001003Action&amp;uji.bean=ee.bean.parent.EECommonSearchBean&amp;PID=W1E63011&amp;SESSIONKEY=1623818403374&amp;lgKbn=2&amp;pkbn=0&amp;skbn=1&amp;dskb=&amp;askb=&amp;dflg=0&amp;iflg=&amp;preId=1&amp;mul=%E3%82%A4%E3%83%B3%E3%83%99%E3%82%B9%E3%82%B3%E3%83%BB%E3%82%AA%E3%83%95%E3%82%A3%E3%82%B9%E3%83%BB%E3%82%B8%E3%82%A7%E3%82%A4%E3%83%AA%E3%83%BC%E3%83%88%E6%8A%95%E8%B3%87%E6%B3%95%E4%BA%BA&amp;fls=on&amp;lpr=on&amp;oth=on&amp;cal=1&amp;era=R&amp;yer=&amp;mon=&amp;pfs=4&amp;row=100&amp;idx=0&amp;str=&amp;kbn=1&amp;flg=&amp;syoruiKanriNo=&amp;s=S100LJC1" target="_blank" rel="noopener">result</a>. Invesco needed 50.00% + 1 share. They already owned ~6% so needed 44+% to get them over the minimum hurdle. They got 348,378 units, which was just under 4.0%. That was obviously a sign to them they weren't going to win this on the "merits" of having the only live deal on the table given the manifest disadvantage of having a "weak" tender agent and a hostile target (not to mention other disadvantages). Now shares are trading ¥22,500-22,550 against the ¥22,750 <a href="http://www.invesco-reit.co.jp/file/en-news-89f7f6ba4c808fa14a2d471b984b28359dccfc08.pdf" target="_blank" rel="noopener">deal</a> scheduled to be launched Friday and go for 26 business days (until 27 July?) when they were trading ¥22,700 this morning. The Invesco deal should be an easier sell to investors and traders. But.... There's always more below the fold.

Yesterday, investors were on tenterhooks waiting and wondering about a possible extension to Starwood's Tender Offer for Invesco Office J Reit (3298 JP). I fully expected them to extend - it cost them nothing to do do so.But they did not extend, or bump the price in face of Invesco Real Estate's announcement last week (and update Monday) that they were almost ready to launch, almost had funding lined up, and would likely launch on the 18th of June and bid ¥22,750/share. Today we get the result. Invesco needed 50.00% + 1 share. They already owned ~6% so needed 44+% to get them over the minimum hurdle. They got 348,378 units, which was just under 4.0%. That was obviously a sign to them they weren't going to win this on the "merits" of having the only live deal on the table given the manifest disadvantage of having a "weak" tender agent and a hostile target (not to mention other disadvantages). Now shares are trading ¥22,500-22,550 against the ¥22,750 deal scheduled to be launched Friday and go for 26 business days (until 27 July?) when they were trading ¥22,700 this morning. The Invesco deal should be an easier sell to investors and traders. But.... There's always more below the fold.

Starwood Tender for Invesco Fails - Invesco Deal More Likely To Work But...

Today after the close, Invesco Real Estate (Cayman) ("IRE"), affiliate/parent of the various entities which either own <a href="https://www.smartkarma.com/entities/invesco-office-j-reit-inc" target="_blank" data-smartkarma-citation="entities:7414:1" rel="noopener">Invesco Office J Reit (3298 JP)</a> shares (such as Invesco Investments (Bermuda)) or manage the office REIT, which had made its original proposal on 20 May, just prior to the original 24 May 2021 expiry of the Tender Offer by Starwood Group, released an announcement suggesting a change to its original proposal. IRE announced it would increase its proposed Tender Offer Price to ¥22,750/share from ¥22,500/share which is the original proposed level AND the level to which Starwood lifted their Tender Offer Price on 1 June 2021. The update (TDNet <a href="https://www.release.tdnet.info/inbs/140120210611447181.pdf" target="_blank" rel="noopener">link</a>, and Invesco <a href="http://www.invesco-reit.co.jp/file/en-news-89f7f6ba4c808fa14a2d471b984b28359dccfc08.pdf" target="_blank" rel="noopener">link</a> (because the document link on the Invesco Office page is faulty as of the time of writing), and PDF also attached below) notes that equity funding is committed, debt funding proposal is being finalised, but there are other conditions still unmet, and at the moment, IRE expects to be able to launch by 18 June, which is pretty close to the original expectations, and the Tender Offer would run for 26 business days (30 business days from the updated proposal). The letter remains non-binding indication of interest, and IRE is still "in the middle of the prior-consultation process with regard to the Tender Offer with the Kanto Local Finance Bureau.The process from here has a few possible branches.

Today after the close, Invesco Real Estate (Cayman) ("IRE"), affiliate/parent of the various entities which either own Invesco Office J Reit (3298 JP) shares (such as Invesco Investments (Bermuda)) or manage the office REIT, which had made its original proposal on 20 May, just prior to the original 24 May 2021 expiry of the Tender Offer by Starwood Group, released an announcement suggesting a change to its original proposal. IRE announced it would increase its proposed Tender Offer Price to ¥22,750/share from ¥22,500/share which is the original proposed level AND the level to which Starwood lifted their Tender Offer Price on 1 June 2021. The update (TDNet link, and Invesco link (because the document link on the Invesco Office page is faulty as of the time of writing), and PDF also attached below) notes that equity funding is committed, debt funding proposal is being finalised, but there are other conditions still unmet, and at the moment, IRE expects to be able to launch by 18 June, which is pretty close to the original expectations, and the Tender Offer would run for 26 business days (30 business days from the updated proposal). The letter remains non-binding indication of interest, and IRE is still "in the middle of the prior-consultation process with regard to the Tender Offer with the Kanto Local Finance Bureau.The process from here has a few possible branches.

Invesco Real Estate Bumps Intended Tender Offer Price

On the 21st of May, after the Starwood Tender Offer for <a href="https://www.smartkarma.com/entities/invesco-office-j-reit-inc" target="_blank" data-smartkarma-citation="entities:7414:1" rel="noopener">Invesco Office J Reit (3298 JP)</a> ("Invesco Office REIT" or "IOJ") had gone ex- for the then-extant Tender Offer Closing Date of the 24th of May and the morning after Invesco Real Estate (Cayman) ("IRE") had announced it had proposed to Invesco Office REIT that it take it private at ¥22,500/unit, Starwood complained about IRE's bid, saying that it lacked detail, funding, and credibility and was incapable of being accepted. It said that its own offer at ¥21,750 was a good offer, and sufficient, and that Starwood was "very encouraged by the unitholder interest received to date."I wrote on that in <a href="https://www.smartkarma.com/insights/starwood-responds-to-invesco-office-s-white-knight-proposal" target="_blank" data-smartkarma-citation="insights:51883" rel="noopener">Starwood Responds to Invesco Office's White Knight Proposal</a>.Starwood was so encouraged by unitholder interest received that the next day it extended the Tender Offer on the last day for another three weeks to June 15th.  <h2>The NEW News</h2>The Proposed Overbid by Invesco has now been matched in price by Starwood.Today, Starwood <a href="https://disclosure.edinet-fsa.go.jp/E01EW/BLMainController.jsp?uji.verb=W00Z1020initialize&amp;uji.bean=ek.bean.EKW00Z1020Bean&amp;TID=W00Z1020&amp;PID=W1E63041&amp;SESSIONKEY=1622519337310&amp;lgKbn=2&amp;dflg=0&amp;iflg=null&amp;row=100&amp;idx=0&amp;str=&amp;kbn=1&amp;flg=&amp;syoruiKanriNo=S100LG3O" target="_blank" rel="noopener">announced</a> (Tender Offer Registration filing in Japanese) that it would raise the price of its Tender Offer from ¥21,750 to ¥22,500/unit, and more importantly, that it would lower the minimum tender condition from 4,341,133 units to 3,877,247 units, which means a post-Tender ownership level of 50% plus one share.This was not unexpected. More discussion below.<hr><div><table class="table table-striped"><tbody>
<tr><td colspan="3" style="width: 723.2px;"><h3>The Insights to Date in the Starwood - Invesco Office REIT Tussle</h3></td></tr>
<tr>
<td style="width: 80.8px;">Date</td>
<td style="width: 92px;">Direction</td>
<td style="width: 508.8px;">Title</td>
</tr>
<tr>
<td style="width: 80.8px;">5 Apr 2021</td>
<td style="width: 92px;">Bullish but...</td>
<td style="width: 508.8px;"><a href="https://www.smartkarma.com/insights/starwood-targets-japan-s-first-hostile-reit-full-tob-for-invesco-office-j-reit" target="_blank" data-smartkarma-citation="insights:49976" rel="noopener">Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT</a></td>
</tr>
<tr>
<td style="width: 80.8px;">8 Apr 2021</td>
<td style="width: 92px;">Bearish but...</td>
<td style="width: 508.8px;"><a href="https://www.smartkarma.com/insights/starwood-hostile-reit-tender-launched" target="_blank" data-smartkarma-citation="insights:50112" rel="noopener">Starwood Hostile REIT Tender Launched</a></td>
</tr>
<tr>
<td style="width: 80.8px;">15 Apr 2021</td>
<td style="width: 92px;">Bullish but...</td>
<td style="width: 508.8px;"><a href="https://www.smartkarma.com/insights/invesco-office-j-reit-responds-to-starwood-s-hostile-offer" target="_blank" data-smartkarma-citation="insights:50381" rel="noopener">Invesco Office J-REIT Responds to Starwood's Hostile Offer</a></td>
</tr>
<tr>
<td style="width: 80.8px;">23 Apr 2021</td>
<td style="width: 92px;">Bearish but...</td>
<td style="width: 508.8px;"><a href="https://www.smartkarma.com/insights/starwood-rejection-of-extension-means-full-hostile-tender" target="_blank" data-smartkarma-citation="insights:50641" rel="noopener">Starwood Rejection of Extension Means Full Hostile Tender</a></td>
</tr>
<tr>
<td style="width: 80.8px;">6 May 2021</td>
<td style="width: 92px;">Outright Bullish</td>
<td style="width: 508.8px;"><a href="https://www.smartkarma.com/insights/invesco-office-opposes-starwood-hostile-offer-and-gets-a-distinctly-beige-knight" target="_blank" data-smartkarma-citation="insights:51162" rel="noopener">Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight</a></td>
</tr>
<tr>
<td style="width: 80.8px;">11 May 2021</td>
<td style="width: 92px;">Outright Bearish</td>
<td style="width: 508.8px;"><a href="https://www.smartkarma.com/insights/starwood-bumps-terms-lowers-threshold-on-invesco-office" target="_blank" data-smartkarma-citation="insights:51302" rel="noopener">Starwood Bumps Terms, Lowers Threshold on Invesco Office</a></td>
</tr>
<tr>
<td style="width: 80.8px;">13 May 2021</td>
<td style="width: 92px;">Bullish</td>
<td style="width: 508.8px;">
<a href="https://www.smartkarma.com/insights/invesco-office-s-terrible-horrible-no-good-very-bad-day-changes-things" target="_blank" data-smartkarma-citation="insights:51410" rel="noopener">Invesco Office's Terrible, Horrible, No Good Very Bad Day... Changes Things</a> </td>
</tr>
<tr>
<td style="width: 80.8px;">20 May 2021</td>
<td style="width: 92px;">Bullish</td>
<td style="width: 508.8px;">
<a href="https://www.smartkarma.com/insights/invesco-office-s-beige-knight-deemed-dirty-gray-by-markets-suddenly-looks-brighter-and-whiter" target="_blank" data-smartkarma-citation="insights:51803" rel="noopener">Invesco Office's Beige Knight (Deemed Dirty Gray By Markets) Suddenly Looks Brighter and Whiter</a> </td>
</tr>
<tr>
<td style="width: 80.8px;">23 May 2021</td>
<td style="width: 92px;">Bearish</td>
<td style="width: 508.8px;">
<a href="https://www.smartkarma.com/insights/starwood-responds-to-invesco-office-s-white-knight-proposal" target="_blank" data-smartkarma-citation="insights:51883" rel="noopener">Starwood Responds to Invesco Office's White Knight Proposal</a> </td>
</tr>
</tbody></table></div>

On the 21st of May, after the Starwood Tender Offer for Invesco Office J Reit (3298 JP) ("Invesco Office REIT" or "IOJ") had gone ex- for the then-extant Tender Offer Closing Date of the 24th of May and the morning after Invesco Real Estate (Cayman) ("IRE") had announced it had proposed to Invesco Office REIT that it take it private at ¥22,500/unit, Starwood complained about IRE's bid, saying that it lacked detail, funding, and credibility and was incapable of being accepted. It said that its own offer at ¥21,750 was a good offer, and sufficient, and that Starwood was "very encouraged by the unitholder interest received to date."I wrote on that in Starwood Responds to Invesco Office's White Knight Proposal.Starwood was so encouraged by unitholder interest received that the next day it extended the Tender Offer on the last day for another three weeks to June 15th.  The NEW NewsThe Proposed Overbid by Invesco has now been matched in price by Starwood.Today, Starwood announced (Tender Offer Registration filing in Japanese) that it would raise the price of its Tender Offer from ¥21,750 to ¥22,500/unit, and more importantly, that it would lower the minimum tender condition from 4,341,133 units to 3,877,247 units, which means a post-Tender ownership level of 50% plus one share.This was not unexpected. More discussion below.
The Insights to Date in the Starwood - Invesco Office REIT Tussle

Date
Direction
Title


5 Apr 2021
Bullish but...
Starwood Targets Japan's First Hostile REIT Full TOB for Invesco Office J-REIT


8 Apr 2021
Bearish but...
Starwood Hostile REIT Tender Launched


15 Apr 2021
Bullish but...
Invesco Office J-REIT Responds to Starwood's Hostile Offer


23 Apr 2021
Bearish but...
Starwood Rejection of Extension Means Full Hostile Tender


6 May 2021
Outright Bullish
Invesco Office OPPOSES Starwood Hostile Offer and Gets a Distinctly Beige Knight


11 May 2021
Outright Bearish
Starwood Bumps Terms, Lowers Threshold on Invesco Office


13 May 2021
Bullish

Invesco Office's Terrible, Horrible, No Good Very Bad Day... Changes Things 


20 May 2021
Bullish

Invesco Office's Beige Knight (Deemed Dirty Gray By Markets) Suddenly Looks Brighter and Whiter 


23 May 2021
Bearish

Starwood Responds to Invesco Office's White Knight Proposal 



Starwood Bumps Invesco Office Price to Match But STILL Not a Done Deal

Japan

Invesco Office J-Reit,Inc. is a real estate investment trust(J-REIT). The Compnay mainly invests in commercial and office building in metoropolitan area.

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Invesco Office J Reit (3298 JP)

Invesco Real Estate Deal for Invesco Office (3298) Successful - Now For the Aftermath

The Invesco Office J-REIT saga closes with IRE at 65%. The squeezeout will come with an EGM. There are several index deletions coming. Some in the...

Travis Lundy

SGX Nikkei ESG-REIT Index Futures Launch Is an Ideal Backdrop for an Important Topic: ESG and REITs

Singapore Exchange just launched the SGX Nikkei ESG-REIT Index futures contract. A multi-win for SGX, but it also serves as a reminder of how...

Kyle Rudden

Starwood Tender for Invesco Fails - Invesco Deal More Likely To Work But...

Starwood ended up with 4% of shares out in its tender. There are many reasons for the failure but it is done. That leaves only Invesco's deal, more...

Travis Lundy

Invesco Real Estate Bumps Intended Tender Offer Price

Invesco Office REIT parent entity has upped their proposed non-binding offer and expect to be able to launch on 18 June. The deal is now JPY 22.750...

Travis Lundy

Starwood Bumps Invesco Office Price to Match But STILL Not a Done Deal

Starwood complained about Invesco Parent's proposed ¥22,500 TOB. Then they extended. Now they have matched price and lowered the minimum hurdle....

Travis Lundy

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