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The Warehouse is selling its 50 per cent stake in The Base retail centre at Te Rapa, north Hamilton, for $37.4 million to joint venture partner Tainui Group Holdings (TGH).
The Warehouse today said the sale would result in an after tax surplus of between $11.8 million and $12.4 million in the 2007 financial year.
It entered the 50/50 joint venture with TGH, the commercial arm of Tainui, to develop The Base in 2003.
The sale announced today, which will see TGH take full ownership of the centre, takes effect on 27 July.
The Base opened for business in 2005 with The Warehouse as its anchor tenant. Tainui today said that when complete, the $100 million development would total 60,000sq m of retail space.
A Warehouse spokesperson said The Base was the largest development joint venture the company had been involved in, although it had jointly developed many other properties.
The Base had been a successful venture for The Warehouse, which had achieved its goal of supporting Tainui to develop a successful centre, and of having a store trading in the centre.
Work is under way at The Base store to have it operating by Christmas as the company's third Warehouse Extra store, a concept that increases the amount of grocery for sale.
TGH had pre-emptive rights to The Warehouse's share of the venture, and chief executive Mike Pohio said today that while the joint venture agreement still had two years to run, the timing of the sale suited both parties.
The Base had been a major commitment for TGH during the past five years, he said.
A lot of thought had been put into making best use of the strategic location of the site, a former Air Force base at Hamilton's northern entry point.
Without the personal support of Warehouse founder Stephen Tindall The Base may not have happened, Mr Pohio said.
Mr Tindall was totally committed to the idea of a joint venture concept from the start, and by making The Warehouse the anchor tenant, ensured that the concept became a reality.
The Warehouse is a takeover target of both Australian retailer Woolworths and New Zealand-based co-operative and competing grocery chain Foodstuffs.
The rivals applied for permission to make an offer for The Warehouse, a deal which could be worth up to $2.5 billion, but the Commerce Commission rejected their applications and is expected to release reasons for its decision within the next few weeks.
Woolworths is to appeal the decision through the courts, while Foodstuffs said it was considering its options.
Warehouse shares were down 2c in early afternoon trading today to $5.99, having been up 4c earlier in the day.
- NZPA
