AMP puts spanner in works for Kiwi

Listed real estate investor Kiwi Income Property Trust has been put in a difficult position by rival AMP Capital Investors in the fight for Government landlord Capital Properties, a report says.

Jason Lindsay, of Credit Suisse First Boston, has analysed Capital's position and found that the high price paid by AMP for its 10.4 per cent of Capital this month complicated the situation.

By paying $1.35 a share, AMP had set a new benchmark, he wrote in a report which predicted Kiwi would make a full takeover bid sooner rather than later.

Capital is trading around $1.26.

"Unfortunately for Kiwi, the price AMP paid for its stake draws a line in the sand on the price investors will be expecting," wrote Lindsay, predicting it would also confuse Capital's proposal to sell its internal management.

"There are a number of theories circulating as to why AMP has taken its 10.4 per cent stake. What is certain is this further complicates any potential full takeover bid from Kiwi and, depending which way AMP may vote, will also go some way towards determining the result of the control of Capital, particularly given the existence of an escalation clause until November this year."

Lindsay predicted Capital could sell its management contract for $40 million.

Capital has yet to set a date for the special shareholders' meeting to discuss the management rights sale.

"If Kiwi is to move for majority control, we think it would likely be sooner rather than later," Lindsay said, citing a predicted reduction in Capital's profit forecasts because of a lower rental revenue and higher operating expenditure.