Southern Capital seeks easier deals after patchy year

By Chris Hutching

Friday 22nd September 2000

Southern Capital has lost its appetite for opportunistic property developments that demand high management input and protracted planning approvals.

Managing director Graeme Wong said Southern Capital would be looking at more easily achievable and attractive deals such as the recent flick on of a farming property in Canterbury for a $2.5 million profit, which would be reflected in the next interim result.

But longer-term analytical forecasts were inappropriate for the entrepreneurial company, according to Mr Wong.

"We wanted to establish our credentials and get a couple of deals under our belt. One of the considerations for selling the Canterbury farm was that we could take a good profit and move forward with other projects," Mr Wong said.

The company this week posted its first full year result as a listed company after the reverse takeover of CBD Properties last year, which owned two commercial properties in Auckland.

A main factor in Southern Capital's after-tax loss of $1.3 million in the year ending June 2000 was a loss on realisation of the Gosling Chapman Centre in Albert St when it sold for $10.25 million compared to a valuation in 1998 of $16.4 million.

Southern Capital will retain the Flight Centre at 48 Emily Pl although it intends to sell it eventually. Meanwhile it is working on fully leasing space in the building.

Sales at the company's residential beachfront develop-
ment at Omaha Beach north of Auckland have been strong with the best sections selling twice and lifting 20% to $750,000 before titles have even been issued.

Mr Wong said building of the first homes would probably begin early next year with 76% of the first stage sold.

He highlighted the share price surge of biotechnology company A2 Corporation where Southern Capital has 1.92 million shares worth around $2.8 million, although a patent challenge from the Dairy Board may dampen speculation.

Southern Capital also has 15.7% of Blis Technology, worth around $5.5 million at current share values, a stake it obtained at a discount to the 10c issue price because of the exclusivity arrangement it has with founder shareholder and director Howard Paterson, based in Dunedin.

His connection with the biotechnology sector is through the connections he has made with Otago University's team of science researchers and the opportunities that arise to commercialise biotechnology discoveries.

But Southern Capital's southern property ventures have become bogged down in planning hearings.

For example, it has been at the forefront in the recent scramble for new property rights in coastal sea spaces with a resource consent application seeking permission to set up marine farming on 1700sq m in Clifford Bay at Marlborough.

This week a hearing in Blenheim listened to evidence from the Maritime Safety Authority about the hazard such a farm would pose.

And near Christchurch it is battling stiff opposition from the regional council over a residential project at Woodend that has been in planning stages for more than two years.

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