It's easy enough to understand SCA Property Group's interest in rival shopping centre owner Charter Hall Retail REIT, and potential synergies from putting the two together.
But JPMorgan analysts reckon there are some good reasons why SCA Property Group would struggle to make it happen.
The quality of SCA's own property portfolio and scrip, asset level resourcing and long-term growth prospects all favour Charter Hall Retail REIT, JPMorgan told clients. And then there is the fact that Charter Hall Retail REIT's manager, Charter Hall Group, has an 18 per cent blocking stake to defend both its shopping centre owner and its position as manager.
JPMorgan weighed into the debate this week with the following list of potential challenges:
In terms of the numbers, JPMorgan says putting the two together could save $4 million a year in management fees at Charter Hall Retail REIT, which would lead to a 3 per cent earnings per security upgrade.
SCA Property Group's options for its 4.9 per cent stake in Charter Hall Retail REIT is front of mind for property investors and analysts.
Bankers are also lined up with Moelis working for SCA, UBS in Charter Hall Retail REIT's corner and Macquarie Capital tending to Charter Hall.
