Kirkcaldie shares surge on property sale announcement
BUSINESSDESK: The share price of Kirkcaldie & Stains rocketed 11.5% today on news that the department store operator has sold its major property in Wellington.
On Friday, the company announced the sale of the Harbour City Centre building in Wellington, which is across the road from its main store. Its major tenant is Contact Energy.
Small Wellington businesses in the building have recently moved out. The property on the main area of Lambton Quay is being earthquake strengthened.
The company did not say name the buyer or disclose the price but the major transaction raises the prospect of a capital return to shareholders.
The Harbour City Centre building had an August 2011 valuation of $46.5 million, which will increase to $48.7 million when earthquake strengthening is completed, the company's 2011 accounts show.
That was more than the value of the whole company because at Friday's share price of $2.60, the company was valued at $26.7 million. The share price rose 11.5% to $2.90 today.
"It has always been touted that this company is asset rich. Investors will like the fact that they are liquidating," Grant Williamson at Hamilton, Hindin, Greene says. There would be a number of ways to return money to shareholders.
The deal is subject to due diligence and board and shareholder approval.
Crucial to shareholder approval will be the position of the Cushing family, which lifted its stake to 19.99% in June, paying $2.68 a share to increase its stake from 18.49%.
Kirkcaldie turned down a bid for the retail business earlier this year, saying the parties had "substantially different" views on the unit's value. It had been looking to expand its property arm.