Capital urges shareholders to hold fire on sale

The directors of takeover target Capital Properties are urging shareholders to hold off on a proposed sale to fund manager AMP until they can issue an independent report on the deal.

AMP's New Zealand property fund AMP Property Portfolio Investments Ltd is offering $1.42 to shareholders for full control of the listed property investor.

The offer is subject to AMP boosting its current 15.67 per cent stake to at least 50 per cent.

Capital Properties has appointed an independent committee of directors to advise on the offer. James Ogden is chairing the committee and is joined by Michael Cashin, Peter Coote and Tony Frankham.

The directors today urged shareholders to remember Capital Properties is the landlord for 60 per cent of all Government space and around a quarter of Wellington's total office space.

It has a number of developments underway or in the pipeline, including the new headquarters for the Ministry of Defence and another for the Ministry of Justice.

With a Labour-led coalition likely to head the next Government, additional space will be needed to house more bureaucrats.

Capital Properties is in the box seat to capitalise on its dominant position -- a factor not reflected in AMP's offer price.

Valuers Colliers International and Jones Lang LaSalle, in the investment company's last annual report, said Capital Properties' portfolio had a control "premium", meaning its real value was higher than the "aggregate of individual property valuations used for financial reporting purposes".

As at March 31 this year the portfolio was valued at $536.6 million, including properties in Auckland (32 per cent of the portfolio) and New Plymouth (8 per cent).

A crucial player in the deal will be Kiwi Income Property Trust (KIP), Capital Properties' largest shareholder. If it accepts the offer it will make a tidy profit, but it may also throw its hat in the ring and make a takeover offer itself.

KIP upped its stake in Capital Properties to just under 20 per cent in November last year and at the time was widely speculated to be gearing up for a full takeover.

AMP is expected to send its formal takeover offer to shareholders between September 29 and October 17.

The Capital Properties board has appointed Cameron & Company as its advisor and will deliver a Target Company Statement to shareholders by October 14.

The statement will contain the committee's recommendation as to whether shareholders should accept or reject AMP's offer.

Shares in Capital Properties last traded up a cent at $1.44 -- matching a year high struck shortly after AMP's offer was announced earlier this month.

- NZPA