Takeover target Capital Properties' value soars

Chris Gudgeon

Independent valuers have found takeover target Capital Properties' portfolio of office and retail space is worth nearly $43 million more than six months ago, a figure suitor AMP Property Portfolio finds hard to swallow.

The valuations, conducted by Colliers International, Jones Lang LaSalle and CB Richard Ellis, indicated Capital's overall property portfolio as at September 30 was $585.6 million or 8.6 per cent up on the last valuation in March.

Capital Properties chief executive Chris Gudgeon said the biggest factor in higher valuation was from significant increases in market rents, particularly in Wellington.

"The commercial office sector went through some pretty tough times between 2000 and 2002 and we're now, in my opinion, correcting off a low base."

Capital said its Wellington assets increased in value by $31.5 million or 9.7 per cent, its Auckland assets increased in value by $11.8 million or 6.5 per cent and its Centre City Shopping Centre in New Plymouth increased by $3 million or 8.7 per cent.

Capital, the subject of a $1.42-a-share takeover offer from unlisted AMP Property Portfolio, said yesterday the revaluation would see its net tangible assets per share (NTA) rise to $1.48 a share as at the end of September, well up on the $1.29 a share March figure.

But AMP Property Portfolio general manager Stephen Costley found the revaluation difficult to swallow.

"This is a significant increase in NTA on top of three previous significant increases."

The increase appeared to be inconsistent with what comparable property companies had reported recently.

"We're keen to understand these valuations, to the point where I would encourage Capital to make a full disclosure to the market of these revised figures."

However, Gudgeon defended the valuation as "absolutely vanilla".

"They're prepared by independent valuers, they're accounted for in the way that they're always accounted for, there's nothing unusual here."

He said there would be full disclosure of the valuation in the independent adviser's report which goes out with the target company statement due in the next two weeks.

Gudgeon said the gains in yesterday's valuation were consistent with previous figures.

"In the year to March 31, we had an 18 per cent uplift so the first six months of this year we've done 8.6 per cent or about that, which is what you expect for half a year."

Forsyth Barr analyst Jeremy Simpson said although his firm had expected some improvement, the revaluation was stronger than expected and did nothing to alter his view that a takeover bid of $1.42 a share was "a bit light".

Capital said the revaluation had been prompted by AMP Property Portfolio's takeover offer and consultants Deloitte had been appointed as independent adviser on the offer.

The current value of Capital's property portfolio will be one of the factors that will be taken into account by Deloitte. Capital shares closed 1c higher at $1.45 yesterday.