Shortland in takeover talks as buyers hover

Kiwi Income Property Trust and Lend Lease are seen as the most likely buyers of Shortland Properties after the company issued a "don't sell" notice to shareholders yesterday.

Shortland would not comment yesterday about who its suitor might be, except for a formal notice to the stock exchange that it "is currently in preliminary discussions with a third party regarding a possible takeover of, or merger with, the company".

The company added: "The directors emphasise that at this time the outcome of these discussions is uncertain and is subject to resolution of significant issues."

Shortland has about $360 million of assets, which on the sharemarket have been discounted by nearly 40 per cent.

Shortland's managing director, Mark Petersen, is due back in Wellington tomorrow and the Todd Group chairman, John Todd, as representative of Shortland's 38 per cent controlling shareholder, is also away from his office.

But Kiwi and Shortland directors held a long meeting late last week in Auckland, and a large Lend Lease contingent visited from Australia.

Lend Lease now owns half the Kiwi Income management company, bought from joint managing directors Richard Didsbury and Ross Green, and that is the area of Shortland that Lend Lease would most likely be interested in acquiring.

Tying the trust and company into one listed vehicle would be a complex issue, but such a merged entity would be worth about $1 billion now: $600 million for Kiwi, $360 million plus $27 million cash for Shortland - and, on completion of Kiwi Development Trust's Royal SunAlliance Centre on Shortland Street, about $225 million more.

At that point it would be New Zealand's third $1 billion property listing, along with Trans Tasman Properties and St Lukes Group.

Mr Didsbury was non-committal about any Shortland involvement: "We look at everything," he said.

Also on the market is Mainzeal's Mobil-on-the-Park, the newest office tower in Wellington, which still has three floors empty and offers buyers a play on picking up the extra income.

Expressions of interest in that building close tomorrow. It is worth $70 million, and perhaps the $80 million which Sir Allan Wright, chairman of Mainzeal's parent, Richina Pacific, told the annual meeting in May it would be worth fully leased.

Numerous parties have said over the past year that New Zealland's listed property market needs rationalising.

CBD New Zealand has just been submerged in the rising Southern Capital, National and Newmarket Property Trusts separated at the altar, and Trans Tasman Properties did not quite create the new listing of NZ Growth Property Trust which would effectively have knocked the parent out of sensible existence.