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Rival deal for NPT management contract

NZN 12/12/2016 Paul McBeth

The country's biggest listed property investor has put forward a deal to take over the management of NPT and has won the backing of the smaller company's board, trumping a rival bid by Augusta Capital.

Kiwi Property Group plans to sell the North City Shopping Centre in Porirua and Majestic Centre in downtown Wellington to NPT for cash and shares worth $230 million, participating in a $100m capital raising to fund the deal and taking a cornerstone 19.9 per cent stake, it said.

At the same time, it would pay $6m for the management contract of the enlarged portfolio.

The deal has won the backing of NPT's board, which will put the proposal to shareholders at a special meeting in February.

It was one of four considered by the board, including NPT shareholder Augusta Capital's pitch to dump the board and facilitate an acquisition of three buildings worth $329m, which would need a capital raising of $185m. Augusta would also buy the management contract for $3.5m.

In a statement, NPT chairman John Anderson said the Kiwi Property deal was "likely to deliver the best short and long-term benefits to shareholders" and that the board will recommend it to shareholders at the special meeting. The directors hired Northington Partners to assess the deals, which backed the Kiwi Property bid, and the board also canvassed major shareholders' opinions.

Kiwi Property chief executive Chris Gudgeon said the partnership will align the interests of the two companies due to the cornerstone shareholding, and the management contract allows for termination if it's in the best interests of NPT.

Kiwi Property chairman Mark Ford said the sale of the properties would let the company recycle capital to fund an expansion of its Sylvia Park retail centre in Auckland.

If the Kiwi Property transaction is backed by NPT shareholders, it would expand the company's portfolio to $400m from its current $170m.

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