Credit Suisse has upgraded Commonwealth Property Office Fund (CPA) to Neutral from Underperform following the combined takeover bid from Dexus and Canada Pension Plan Investment Board (CPPIB). The bid represents a 4% discount to net asset value, the broker calculates, and involves a partial cash, partial Dexus scrip-swap offer. While the deal offers an exit for owner Commonwealth Bank (CBA), the broker believes it is likely to accelerate CPA's own plans to internalise management of the fund. DXS may then sweeten the price or hope a re-rating of its own shares will do so automatically on the scrip-swap element. The broker has upgraded its rating on CPA to Neutral but despite the takeover potential still sees better value in holding DXS or Investa Office (IOF). Target price for CPA is raised to $1.21 from $1.17.
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