13cabs owner continues property sell-off as shares hit pre-COVID levels

13cabs owner continues property sell-off as shares hit pre-COVID levels

Photo: 13cabs Hobart, via Facebook.

The taxi group formerly known as Cabcharge has seen its shares return to pre-COVID levels today after announcing contracts were signed for the $78 million sale of its O’Riordan Street, Alexandria property in Sydney, with net proceeds to be returned to shareholders as a fully franked dividend by the end of 2023.

This represents the second asset sale for A2B Australia (ASX: A2B) within four months as part of a consolidation strategy spearheaded by executive chairman Mark Bayliss, who was appointed to the role in March 2022 and championed a renewed corporate focus of "better before bigger" to tackle costs, exit underperforming activities and bring the company back to profit.

The latter was achieved in the recent December half for the company behind such well-known taxi brands as 13cabs and Silver Service, as well as taxi technology and payments divisions MTI, Cabcharge, Spotto and Giraffe Payments.

A2B reported a 21 per cent rise in revenue to $72.3 million for the half as fleet numbers and total fares increased - a feat Bayliss attributed to "the trust and reputation in our taxi brands as people start to use individual transport more".

"This is driving growth in revenue, earnings and profit," Bayliss said in February. 

The announcement of the property sale to Sydney real estate developer Double Space - a joint venture between Enice Technology and Bestplace Corporate - was made after the market closed yesterday, and is part of another core tenet of the new strategy around unlocking value from property and returning capital to shareholders.

"As part of our ‘better before bigger’ strategy, the Board concluded after an external strategic review that owning or remaining in the current sites in the long term was not the right solution for the business," Bayliss said.

"With this agreement to sell the O’Riordan Street property, A2B will have sold both its Sydney properties, optimising shareholder value and facilitating an attractive cash return to shareholders."

Settlement is expected to occur in December with estimated net proceeds of $73 million. A2B will remain on the site through a three-year lease back while the company assesses longer-term property requirement.

A $19 million settlement on the sale of A2B's Bourke Road, Alexandria property is expected in April, with the property changing hands to Singapore-based, pan-Asian self-storage property investor and developer StorHub, which is backed by global private equity group Warburg Pincus.

Even though A2B expects net negative impacts to EBITDA of $2 million and $4 million in FY24 and FY25 respectively due to these agreements, investors were encouraged by the move this morning with shares rising 14.73 per cent to $1.48, giving the group a market capitalisation of approximately $179.4 million.

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