(Corrects headline to say the value of the trust is $3.5 bln, not the offer)
SYDNEY, Oct 11 (Reuters) - Australia's Dexus Property Group and the Canada Pension Plan Investment Board (CPPIB) on Friday made an initial offer for Commonwealth Bank of Australia's A$3.7 billion ($3.5 billion) listed office trust.
The acquisition would give Dexus, Australia's largest office management firm, a 26 percent share of the key Sydney prime grade office market and increase its office assets under management by almost 50 percent to A$11.5 billion.
Dexus already has a 14.9 percent stake in the Commonwealth Property Office Fund (CPA). The group and CPPIB are offering A$0.68 a unit in cash and A$0.4516 a unit in stapled securities for the remainder of the trust.
The proposal offers CPA unitholders a headline offer price of A$1.15 a unit.
Dexus shares were up 0.7 percent to A$1.05 in early trade. CPA shares had picked up 2.2 percent to A$1.18, while Commonwealth Bank shares had gained 1.9 percent to A$72.16.
The deal would expand CPPIB's exposure to Australia's office assets.
"The proposal is an excellent opportunity to expand our Australian core office portfolio and is in line with our strategy to invest in high-quality assets that are well position in their markets," Graeme Eadie, senior vice-president and head of real estate investments at CPPIB, said in a statement.
A deal will need to be approved by Australia's Foreign Investment Review Board (FIRB) and the Australian Competition and Consumer Commission (ACCC).
If the deal goes through, CPA will become an unlisted fund, managed by Dexus and owned equally by Dexus and CPPIB.
($1 = 1.0575 Australian dollars) (Reporting by Jane Wardell; Editing by Ryan Woo)