Kirkcaldie property sale falls through after buyer walks away

The mystery buyer of Kirkcaldie & Stain's Harbour City Centre on Wellington's Lambton Quay has walked away after deciding the building was not the right fit as an investment.

The bidder for the $46.5 million property confirmed it wasn't satisfied with the building after deciding the rear development site did not fit its business plan, Kirkcaldie says in a statement. The buyer missed last Friday's deadline to confirm it was satisfied after performing due diligence.

Kirkcaldie "understands that the purchaser, whilehappy with the main building, concluded that the associated rear development site did not fit with its business plans", it says. "The company is continuing to review its options with respect to the Harbour City Centre buildings."

The building is seen as the jewel in the unprofitable retailer's crown, with its value easily eclipsing Kirkcaldie's entire market capitalisation of $31.2 million, a value gap that has attracted investors including corporate raider Sir Ron Brierley and former Brierley Investments chairman Sir Selwyn Cushing's family.

Kirkcaldie first flagged the sale of the building on October 26, conditional on the purchaser completing and confirming satisfaction with due diligence by 5pm on November 30.

Shares of tightly held Kirkcaldie last traded unchanged at $3.05 and have jumped 17% since the conditional sale was announced in October.


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It's like this.

Kirks could increase their rent to lift the value of the real estate. One suspects the business cannot support a higher rent, however.

It's a catch 22. A failed business is of no value, while a building with the loss of a tenant this size would also lose substantial value.

The question is how much value, and one suspects the current share price is about right.

Of course, large shareholders could always personally guarantee a long-term lease, but I doubt this is going to happen.

Don't you hate speculators!

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Shows how much you know. Kirks don't occupy the Harbour City Centre, they occupy space in the building across the road. The Harbour City Centre is a fantastic building that has been brought up to current building and seismic code. This, along with the development opportunity, clearly support a higher share value, regardless of the retail trading.

Before you choose to comment at least do you homework, Richard!

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The Harbour city centre is a lovely property. With Contact signing up for a long-term lease and spending plenty on the fit-out this will be a very tidy long-term asset to hold. The retail business rents premises across the road, so it's easy for amatuers to get confused with this one. Sir Ron will sort this out eventually for a nice gain.

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