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Kavinda Herath/Stuff
Invercargill Central: its civic investors aren’t in it for short-term dividend profits.
The Invercargill City Council’s holding company invested $43.2m in the Invercargill Central shopping centre, but its shareholding has now been valued at just $500,000.
The valuation has prompted a reassurance from chair Brian Wood the development is performing as expected.
Wood said it had been required to assess the fair value of its shares – the value if they were sold today, based on the anticipated dividend.
It had done so, but the company had no intention of selling its investment, and short-term dividends were never ICHL’s focus, nor the council’s, Wood said.
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“The decision to invest in the inner city development was not one made for commercial benefit, but rather community benefit,’’ Wood said.
“There are no surprises here and we knew we’d need to hold our investment for a long time.’’
The council, through Invercargill City Holdings Limited (ICHL), was a partner with O’Donnell CBD Ltd in the joint venture which has redeveloped the inner-city Tay-Dee-Esk-Kelvin street block.
Wood said the council believed the redevelopment was likely to make the central city a hub for retailing, business, culture, entertainment, education and social services for Invercargill and the wider Southland region.
“It’s fair to say that the community feedback to date is that the investment has achieved those objectives.”
Kavinda Herath / Stuff
Invercargill Central project manager Hayden Rankin says more retail and food outlets will soon join the centre. Video first published November 2022.
The reduced value of the shares had no impact on cash flow or any of ICHL’s other activities, he said.
ICHL was the umbrella company for the council’s property, electricity and airport operations and collectively its dividend for the financial year is $4.886m.
Its after-tax profit, “excluding the impairment of investment’’ in the joint venture, was $5.164m which was down on the $8.542m the previous year.
The fair value adjustment had meant that its property company, Invercargill City Properties Ltd, produced a zero after-tax profit, compared to $3m last year.
Electricity Invercargill Ltd produced an after-tax profit of $5.73m compared to $6.13m last year.
Invercargill Airport Ltd continued to be impacted by Covid-19 and its after-tax profit was $203,000 compared to $298,000.
The airport company was exploring opportunities to develop its existing infrastructure, Wood said.
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