Brokers at odds on AMP Capital offer

The takeover tussle for Capital Properties is turning into the battle of the brokers as analysts express different views on whether the Wellington landlord should accept AMP Property Portfolio's takeover bid.

Reports came out this week from Macquarie Research Equities, UBS Investment Research and Citigroup, all debating valuations in the independent advisers' report from Deloitte issued in response to AMP Property Portfolio's $1.42-a-share offer for Capital. Deloitte valued Capital at $1.48 to $1.72.

UBS' Stephen Freundlich advised investors to take up the offer and sell to AMP.

Although the property market was in "a sweet spot", inflation and the cost of raising money could cause an adjustment and Capital's share price could plummet.

"The Deloitte report highlights the large degree of variability around the Capital valuation," he wrote. "Relative to what the market is implying for other listed property trusts, the Deloitte base case valuation appears aggressive, in our view. We recommend investors sell into the offer."

But Macquaries' Matthew Lambourne took the opposite tack, saying the shares were worth much more than AMP was offering.

He said the takeover was unlikely to succeed because the offer price was too low, particularly in light of Capital releasing new valuations on its portfolio.

On September 21, ABN-Amro's Mark Lister told investors to hold because the offer was too low to succeed.

His report came out before Deloitte's valuation range.

Citigroup's Blair Cooper's challenged that Deloitte valuation, writing that he had "serious misgivings" about that range and that his valuation was spot on AMP's offer at $1.42.

Stephen Costley, general manager of AMP Property Portfolio, attacked the Deloitte report and said its valuation range was not credible.

"The report by Deloitte sets up unrealistic expectations for shareholders," he said.