Don't sell, say Capital Properties directors

Capital Properties' independent directors have told shareholders to reject the higher takeover offer from AMP Property Portfolio while reporting a 10 per cent rise in first-half profit yesterday.

Their rejection follows Portfolio's criticism on Wednesday that their lack of response to the increased offer of $1.48 a share - up from $1.42 - was "puzzling".

But the Wellington-based landlord's chairman, Tony Frankham, said the offer was still at the bottom of a $1.48 to $1.73 range reached by valuers Deloitte. Even after AMP's price increase, the directors did not find the offer fair value.

"Over the medium to long term, holding Capital Properties shares is likely to produce a higher-value outcome for shareholders than acceptance of the AMP Property Portfolio offer."

However, the independent directors also warned that, if AMP's bid failed, Capital Properties' share price could nosedive.

Frankham called for the offer to be raised to $1.55.

But AMP general manager Stephen Costley has ruled out any more increases or extensions of the offer, which closes on November 16.

Costley described the independent directors' position as "inconsistent, baffling and unrealistic".

He said the offer could not be extended because it was within the statutory 14-day timeframe and $1.48 was an "excellent price".

Capital said rising rents and falling vacancies pushed up half-year net profit to $10 million from $9.1 million last year.

Its Wellington office blocks made the largest contribution, but earnings were also boosted by the contribution of its Centre City shopping centre in New Plymouth, bought last December.

Total revenue rose from $29.3 million to $32.5 million, of which Centre City generated $1.9 million.

Capital chief executive Chris Gudgeon pointed to more tenants in his buildings as evidence of the company's health.

"In March this year, Capital had 2800sq m of vacant offices but that's now halved to about 1400sq m. Our vacancy factor was about 1 per cent and now it's about 0.6 per cent."

Property values rose from $430 million to $582.7 million and net tangible assets per share increased from $1.29 to $1.49 - just ahead of the $1.48 offered by AMP.

Shareholder funds are up $52.6 million to $358.4 million and Gudgeon said the company was on track to pay a full-year dividend of 10c a share.

He ruled out speculation that potential Treaty claims on Capital's buildings would damage the company. He said nine Wellington buildings could be subject to claims, but the Government would have to pay full compensation for any settlement.