Thursday 26th November 2009
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Kermadec Property Fund Ltd, owner of seven commercial and industrial properties throughout New Zealand, said it has an unconditional agreement to sell two properties for $7.7 million, freeing up funds to repay debt. Its shares surged 11%.
The property investor is selling office buildings on the corner of Auckland’s Cook Street and Nelson Street for $1.38 million less than current book value of $9.06 million. The net sale proceeds and existing cash reserves will be used to reduce bank debt by $9.5 million, trimming Kermadec’s gearing ratio to about 37.5%, it said in a statement today.
The shares rose 5 cents to 52 cents today, valuing the company at $42.5 million, and have gained about 16% in the past six months.
The company said net tangible assets will fall to 85 cents from 87 cents currently. Despite the negative impact on NTA, using the asset sale proceeds is the most appropriate means of lowering gearing in the current environment, executive director Christopher Francis said.
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