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GPT steps away from Australand bid

Yesterday afternoon, GPT Group (ASX: GPT) announced it has withdrawn from pursuing a proposal with the board of Australand Property Group (ASX: ALZ) to acquire its commercial and industrial assets and business.

GPT expressed an interest in the company in December 2012 when its Singapore-based parent, Capital Land, hinted that it was potentially removing itself from the Australian property market. GPT said it would work in the interests of both sets of security holders to develop a proposal for the business, but following the completion of detailed due diligence and discussions, the company said it become apparent that a transaction at a price that GPT is willing to pay is not possible.

GPT said it kept the market informed of proceedings and maintained a disciplined approach to the proposal, but says it does not need the transaction to achieve its strategic goals. It will now look for growth within its logistics and business parks and office portfolio.

GPT’s share price has rallied in the past year, going from $3.20 to $3.965, but has plenty of room to expand in many of its business divisions. The company reported NPAT of $594.5 million to 31 December 2012, up 141% on the pcp and said it reflected strong operational performance and an uplift in property values. The company has definitely exceeded expectations and if interest rates continue to drop, the property portfolio could very well increase further.

Foolish takeaway

Australand has also seen its share price pushed up very high in recent months, but it could have been founded on potential takeover expectations. The P/E ratio is over 19 whereas GPT’s sits around 12. As with most property stocks like Westfield (ASX: WDC) and Stockland (ASX: SGP), the two companies offer strong dividends and large market capital. Keep these stocks on your watch list because they are both quality businesses and Australand may well get cheaper in coming months.

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Motley Fool contributor Owen Raszkiewicz does not own shares in any of the mentioned companies.

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